Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

MANCHESTER SHIP CANAL BILL (By Order)

As amended, considered; to be read the Third time.

MANCHESTER CORPORATION BILL [Lords] (By Order)

Read a Second time and committed.

MAIDSTONE CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL

PIER AND HARBOUR PROVISIONAL ORDER (GREAT YARMOUTH NEW BRITANNIA PIER) BILL

PIER AND HARBOUR PROVISIONAL ORDER (GREAT YARMOUTH PORT AND HAVEN) BILL

Read the Third time and passed.

Oral Answers to Questions — LOCAL GOVERNMENT

County Councils (Definitive Maps)

Mr. Skeffington: asked the Minister of Housing and Local Government and Minister for Welsh Affairs how many country councils in England and Wales have not yet published definitive maps; and what action he is now taking to accelerate progress.:

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Geoffrey Rippon): Thirty-five county councils in England and Wales have not yet published maps defining the rights of way over the whole of their areas, but nine of these have published definitive maps for parts. My right hon. Friend wants to see these maps completed as soon as possible, but the process is inevitably a long one.

Mr. Skeffington: Is there anything the Joint Parliamentary Secretary or the Minister can do to speed up the authorities which have not already published definitive maps? It is now 13 years since legislation was passed and this period of uncertainty gives rise to all sorts of problems and bad relationships which these definitive maps would help to ease.

Mr. Rippon: As the hon. Gentleman knows, my right hon. Friend has powers to give directions, but that would probably slow the progress up because of the amount of legal proceedings that would be generated. We are trying to hurry this work up and are doing all we can.

Mr. Lipton: Further to that reply, will the hon. Gentleman consider circulating in the OFFICIAL REPORT a list of county councils which have published definitive maps so that we can chase up those which have not done their stuff?

Mr. Rippon: I will arrange for a list to be circulated in the OFFICIAL REPORT setting out the position.

Atmospheric Pollution, Rishton

Mr. H. Hynd: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what action he is taking on a letter from Rishton Urban District Council about atmospheric pollution from Whitebirk Electricity Generating Station.:

Mr. Rippon: The district alkali inspector has explained to the council that no practicable means exist here for reducing the mistiness of the chimney gases or for preventing their down-draught under certain atmospheric conditions. The Central Electricity Generating Board has offered to try in future to reduce the load on the station under those conditions. This should help considerably.

Mr. Hynd: As the Joint Parliamentary Secretary will be aware from his files, this is a long-standing complaint extending over some ten years. Since certain technical solutions have been suggested—and, I understand, accepted, apart from the financial difficulties involved—and as the local council was so incensed about this that it has refused to apply the Smoke Abatement Act in the area while


the atmosphere is being polluted by the power station, will the Minister give instructions for this matter to receive special attention?

Mr. Rippon: The difficulty is that this is a very old complaint and there are really no economic solutions that would solve the problem entirely. I think the action which the board is going to take now will help, and I understand that during the summer extra equipment will be fitted to the dust-collectors and that that should improve their performance.

Mr Hynd: What about a higher chimney?

Mr. Rippon: That is one solution which would be really uneconomic in the circumstances.

Mid-Wales

Mr. Hooson: asked the Minister of Housing and Local Government and Minister for Welsh Affairs, in view of the proposed closure by British Railways of railways in Mid-Wales and the consequent effect on the livelihood of at least 300 families in Montgomeryshire, if he will now take steps to bring alternative means of employment and alternative means of transport into the area..

The Minister of Housing and Local Government and Minister for Welsh Affairs (Dr. Charles Hill): These closures cannot take place until my right hon. Friend the Minister of Transport has decided what action he will take on the recommendation from the Transport Users' Consultative Committee for Wales and Monmouthshire. Any other action would be premature at this stage.

Mr. Hooson: Does not the Minister consider that action, to be effective, must be taken before the affected families leave the area; otherwise, the trend to depopulation in the area is accentuated?

Dr. Hill: The Transport Users' Consultative Committee, which published its report on 28th May, included a number of detailed recommendations to my right hon. Friend the Minister of Transport, who is now considering these before reaching a decision.

Mr. C. Hughes: On a point of order. Can you assist me, Mr. Speaker. This Question has been passed by the Table and presumably, therefore, is in order.

It is a Question addressed to the Minister of Housing and Local Government on the affairs of two Departments over which he has no executive authority.

Mr. Speaker: Would it suit the hon. Member if we investigated this at some other time and not in the middle of Questions? I will instruct myself on it and find out what it is all about so as not to take up time now.

Sir Harmar Nicholls: Is my right hon. Friend aware whether this is part of the Liberal promise, namely, that they can balance the accounts of British Railways, and keep all the railway lines open, wherever they are?

Mr. Hooson: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what steps he is taking to implement the policy of Her Majesty's Government to build up existing towns in Mid-Wales in order to assist in attracting suitable industries there.

Dr. Hill: The Government are assisting the building of Mid-Wales towns by offering financial help to any suitable incoming industry; and since 1959 there have been six successful applicants.

Mr. Hooson: Does the Minister consider that, in order to afford guidance in future to those authorities and bodies concerned with attracting industries to Mid-Wales towns, he should now disclose the precise reasons for refusing to approve the proposed Government factory for the Antler organisation at Welshpool, and, if so, when can we expect these detailed reasons to be given?

Dr. Hill: I am not prepared to give these detailed reasons, but may I say that this was a proposal for a Government grant of £350,000 for a scheme that would have employed 350 men in an area not suffering the depopulation which is to be found in so many other parts of Mid-Wales.

Mr. C. Hughes: Is it not abundantly clear by now that, after a century of depopulation in Mid-Wales, the only hope is the policy advocated by the Labour Party, namely, the proper and planned distribution of industry?

Dr. Hill: The solution of the problem of depopulation in Mid-Wales lies in


the attraction of a number of small industries properly distributed throughout Mid-Wales. I am fully alive to this problem of depopulation, and I am doing my utmost in that direction. As the hon. Gentleman knows, an economic survey of the general problems of Mid-Wales is now proceeding.

Car Parking, Cwmbran

Mr. Abse: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he is aware of the concern of residents at Llywelyn Road, Cwmbran, at the revised proposal now before him of the Cwmbran Development Corporation to demolish their houses to make room for car parking; whether any inspection of the interior of these houses was carried out before the proposal was made; and whether he will direct that sites consisting of slum areas should be used for car parking or more multi-storey car parks built to avoid the necessity for demolishing sound houses.

Dr. Hill: I know of the residents' concern. The corporation has not yet asked to inspect the interior of these houses but it has explained to the owners that demolition may be necessary in seven to ten years' time if adequate car parking space is to be provided in the town centre. Cleared slum areas would be too far away. Multi-storey car parks may ultimately be needed, but they are very costly.

Mr. Abse: While appreciating the cost involved in multi-storey car parks, will the Minister see that he is informed as to the condition of these houses, which have a long life available to them, which are in excellent condition and well tended? Will he make no quick decision in view of the feeling that is abroad in the area that these houses to be demolished for a car park are in such jeopardy because of the lack of intelligent planning in regard to the town centre on the part of the Cwmbran Development Corporation? Will he also note that the development corporation unfortunately seems to be intent on pulling down more houses than it is putting up?

Dr. Hill: There will be no need or question of any early decision by me, but I think the hon. Member does less

than justice to the development corporation, which is faced with the need for the comprehensive redevelopment of the commercial centre. The car parking problem is but part of it. The corporation is willing now to buy by agreement any houses that are offered to it, and, indeed, it is looking forward to a proper redevelopment in the centre of Cwmbran. It seems to me that it has acted properly in what it has intimated it might have to do.

Coldharbour Farm, Ampthill

Mr. Parker: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has been consulted about the proposed burning down of Coldharbour, a farmhouse of some architectural interest near Ampthill, belonging to the Bedford Estates, on 14th July.

Mr. Rippon: The local planning authority has consulted my right hon. Friend about a notice it has received of intention to demolish the building, which is no longer required for agricultural purposes. It is arranging to inspect it and will let him have a report. It has power to submit a preservation order.

Mr. Parker: Is not the proposal to burn down this building in this way one of the more vulgar of the publicity stunts of the Duke of Bedford?

Mr. Rippon: I understand from Press reports that this mock-Nero saturnalia, as it has been called, is not now to take place. Now action remains to be taken, if necessary, by the county council in the first instance.

Dartmoor National Park

Mr. Hayman: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what representations he has received regarding the use by Her Majesty's forces of areas of Dartmoor National Park outside those areas reserved to them.

Mr. Rippon: My right hon. Friend has received none for about a year.

Mr. Hayman: Will the Parliamentary Secretary request his right hon. Friend to consult his right hon. Friend at the War Office about a memorandum which has been submitted by the Standing


Committee on National Parks and other national and local bodies about the use by troops of areas of Dartmoor outside those reserved to the troops? Will he also ask to see the Western Morning News of 25th May, so that he can look at the photographs showing the churning up of areas outside those reserved to the military?

Mr. Rippon: We are well aware of the concern about this matter and have had a copy of the memorandum to which the hon. Member refers, which deals with the position of Dartmoor generally and not about the matter raised in the hon. Member's Question about the use by the forces of various areas of Dartmoor outside those reserved to them.

Oral Answers to Questions — HOUSING

Old People, Bishop Auckland

Mr. Boyden: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will authorise the building of a limited number of aged people's dwellings in Category D villages in the Bishop Auckland constituency.

Mr. Rippon: My right hon. Friend will' consider on its merits any proposal for development in these villages which requires his authorisation. He has now before him five appeals by the Bishop Auckland Urban District Council relating to the erection of 44 dwellings for old people in five villages in their area. A public local inquiry will be held and he will give his decision after he has received and studied the inspector's report.

Mr. Boyden: Will the Minister consider this matter sympathetically when he gets the report? Is he aware that many of these old people who want new bungalows and who have lived in these old industrial villages for a long time will be heartbroken if they have to move away to Bishop Auckland?

Mr. Rippon: I am sure that my right hon. Friend will consider all the evidence that is put forward.

Land, Brentwood

Mr. M. Stewart: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he

will inquire into the new use now proposed to be made by Brentwood Urban District Council of land purchased by them from the War Department for building to meet the council's housing need.

Dr. Hill: The hon. Member has been good enough to write to me about this. The council obtained permission for the development of this land for residential purposes. I know of no proposal to change that use.

Mr. Stewart: Is not the Minister aware that when the negotiations to acquire this land were going on the council's own housing need was stressed, and that what is now proposed is to sell a good part of the land to private developers so that the council's own housing list will not be affected to anything like the extent that was represented at the time the land was acquired?

Dr. Hill: This land was acquired by the local authority at the district valuer's price. It is an area of 31 acres. It is proposed to develop half of it for council houses and half of it for private houses. The whole scheme, which is being prepared by a distinguished architect, in-includes shops, community centres and the like. It seems to me to be an admirable and sensible scheme, and I am glad that the council has adapted it.

Mr. Gardner: Is my right hon. Friend aware that the criticism of the Brentwood Urban District Council which is implicit in the hon. Gentleman's Question does not bear careful examination? Is he aware that of the 400 houses that the council proposes to build or has built on this land 200 will be council houses, and that the profit which the council will get from the sale of the leasehold to private developers will go directly into the housing account and so enable the council to benefit the quality of the council houses, the rents of them and the people who live in them?

Dr. Hill: I expect the council to act as a responsible body and to have regard to the housing needs of the people of the area and not merely one section of them.

Mr. Stewart: But will the Minister consider this point, because his first answer to me suggested that he had not


seized himself of it? The use which the council is now proposing to make of the land is very different from that which was represented to the War Office and the county planning authority when the land was acquired. This is the point of principle involved. Will the Minister look into that?

Dr. Hill: The council, in acquiring it, needed this land to serve the housing needs of the people of the area. It regards the housing needs as including not only council house development but making possible the development of houses for owner-occupation.

Improvement Grants

Mr. Frank Allaun: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will relax the conditions under which improvement grants are made for the introduction of baits, hot water and inside toilets.

Dr. Hill: While I recognise that the present statutory requirement of five standard amenities as a condition of grant may give rise to difficulties in some cases, I do not think it would be in the general interest to consider relaxation of the requirement at the present time.

Mr. Allaun: Will the Minister reconsider, at least, the condition that the bath must be in a separate bathroom? While that is naturally desirable, is he aware that there are many houses in good condition in which this requirement alone is preventing the introduction of a bath, and where public money would not be ill spent?

Dr. Hill: I am not unsympathetic to the hon. Gentleman's point of view, which, if I recall rightly, he expressed in Committee last year. My present attitude is that public money should be concentrated on those cases where the full improvement can be achieved, but I recognise that there is something in the hon. Gentleman's point and I will consider what he says.

Sir Harmar Nicholls: Is my right hon. Friend aware that there are one or two marginal points which he might look into, particularly the size of the windows in some rural areas, which are below the regulation size but in keep-

ing with the area and not necessarily unhealthy? In regard to this sort of thing, would it not be helpful if he had another look at the regulations?

Dr. Hill: The replacement of windows is not one of the improvements covered by the standard grant.

Sir H. Nicholls: It is.

Dr. Hill: I have no doubt that my hon. Friend has a point in mind.

Compulsory Purchase and Clearance Orders, West Ham

Mr. A. Lewis: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he has studied the letter sent to him by the hon. Member for West Ham, North, regarding the concern felt by the residents in the Chapman Road and Chadd Street areas of Plaistow at the delay on the part of his Department in granting the compulsory purchase order and clearance order requested by the West Ham County Borough Council; and whether he will make a statement.

Dr. Hill: Yes, Sir, and my hon. Friend has written to the hon. Member. My decision on the Chadd Street Compulsory Purchase Order was issued last Friday. The Chapman Road Clearance Order raises unusual questions, which I hope to resolve very soon.

Mr. Lewis: I thank the Minister and his Parliamentary Secretary for the letter and for the fact that since the Question was put down the Chadd Street order has been confirmed. Is he aware that the Chapman Road area is the most important one and that in it a number of my constituents are living in the most appalling conditions? Their landlords will not carry out any repairs because they do not know what will happen to the property. This has been going on for a very long time. Will the Minister do his utmost to expedite this order?

Dr. Hill: Yes, I will. There are some technical difficulties here. The method of the clearance order has been used for the purposes of comprehensive redevelopment. Those technical difficulties are holding matters up, but I will do my utmost to expedite the decision.

Mr. Elwyn Jones: Can the Minister say how long this matter has been under consideration? I believe that the residents concerned happen to be constituents of mine.

Mr. Lewis: My hon. and learned Friend should know his constituency better. They are constituents of mine.

Dr. Hill: Whatever the constituency is, the dates are just the same. The inspector's final report for the Chadd Street scheme came to me at the end of April; for the other scheme, in March.

Leasehold Property, Wales

Mr. G. Thomas: asked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will now publish a summary of the four reports submitted to him on leasehold problems in Wales; and whether he is now able to make a statement on Her Majesty's Government's policy in the matter.

Dr. Hill: I have now received reports from the Law Society, the Royal Institution of Chartered Surveyors, the Chartered Auctioneers and Estate Agents Institute and the Incorporaed Society of Auctioneers and Landed Property Agents on their experience of the working of the leasehold system in England and Wales. I will publish a summary of the reports as soon as it has been agreed by the bodies concerned.
I am now engaged upon a re-examination of the problems involved in relation to the renewal of ground leases of residential property, on the basis of market value.
I should perhaps add that the reports show that there is a great deal of misunderstanding on the part of lessees about what would be a reasonable price to pay—in increased rent or otherwise—either for renewal of the interest or for purchase of the reversion. The right course for anyone who is offered renewal or purchase is to get competent advice. If they are advised that the terms are fair, it would obviously be sensible to conclude the bargain now.

Mr. Thomas: I thank the Minister for that reply. I do not want in any way to exaggerate the promise held out, but is he aware that there is a ray of hope in what he says for people who are being

held to ransom by ground landlords? Is he further aware that if his statement means that he is now considering granting an automatic right to leasholders to renew their leases at a fair price, this news will be received with considerable satisfaction but that we do exepct a fair price?

Dr. Hill: I had better content myself with saying that I am engaged on this re-examination of the problems in relation to the renewal of ground leases of residential property on the basis of market value.

Mr. Gower: Since, as my right hon. Friend says, some people may have the wrong impression of what is a reasonable price, in his re-examination of the matter will he also take account of the fact that many people are in difficulties because they are not even given an opportunity of renewing their leases or of buying the freehold, and that that is another matter of serious concern for them?

Dr. Hill: That is certainly a point which will come into my re-examination.

Mr. Callaghan: Is the right hon. Gentleman aware that great expectations have been aroused in South Wales by his forthcoming attitude in this matter? Does he see any prospect of legislation in the near future?

Dr. Hill: I had better confine myself today to an announcement of the reexamination and await its outcome.

Rental Properties

Mr. Lipton: asked the Minister of Housing and Local Government and Minister for Welsh Affairs what further steps he is taking to encourage property owners to buy or build more houses for rental.

Dr. Hill: As the hon. Member knows, I am encouraging housing associations, with the help of capital advanced by the Exchequer, to show that houses can be built to let at rents which people are willing to pay. I believe that this scheme will be successful, and I hope that it will help to bring private developers back into this field.

Mr. Lipton: Is it not rather late in the day—five years after the Rent Act was supposed to solve the problem—to


talk about the availability of property to let? Is it sufficient for the noble Lord the other Parliamentary Secretary to attend the annual binge of the Association of Land and Property Owners in London the other day and urge it to build more houses for rental? When will the Government wake up to the fact that the Rent Act of 1957 was the biggest failure in eleven years of Conservative rule and that it has caused more misery and hardship than anything else the Conservatives have ever done?

Dr. Hill: I plainly recognise that there is a great need for building to let. One thing that has stood in the way of this is the Opposition's threat to reimpose rent control. I regard this loans scheme as a useful scheme to secure a return to building to let. There are already signs of great interest. Upwards of 20 building projects are in preparation, and the first loan has already been made.

Mr. M. Stewart: But is it not significant that five years after the passing of an Act which we were repeatedly told would solve the problem the Minister has to say that he is at the beginning of what he hopes will be a hopeful scheme? Does not that mean that the idea that the Rent Act will solve this problem must be written off once and for all?

Dr. Hill: The hon. Member can ill conceal his disappointment that this effort at building to let is to be strengthened by the provisions of the Housing Act. The responsibility for making sure that discouragement exists to building to let belongs for the most part to the party opposite.

Mr. Lipton: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

House Purchase (Older Properties)

Mr. Shepherd: asked the Minister of Housing and Local Government and Minister for Welsh Affairs if he is now prepared to restore the assistance previously given to house purchasers wishing to buy the older type of house

Dr. Hill: When the Government's House Purchase Scheme was suspended last year as part of the measures to

reduce the burden of public expenditure some £92 million of the £100 million authorised by Parliament had already been used up. To re-start the scheme would therefore require fresh legislation and I can hold our no prospect of this at present.

Mr. Shepherd: Will my right hon. Friend accept my view that that is a disappointing Answer? Is it not a fact that it is more difficult for a man at the occupational level to buy his own house today than it was pre-war and that we must do something to change that situation?

Dr. Hill: I can understand my hon. Friend's disappointment. On the other hand, it is well to bear in mind that lending by local authorities for this and other purposes has greatly increased. Last year the figure stood at £99 million compared with £66 million the year before.

Oral Answers to Questions — NATIONAL FINANCE

University Building Programmes

Mr. Shepherd: asked the Chancellor of the Exchequer what machinery exists for ensuring that money spent by the universities on their building programmes is expended in the most economic manner possible.

The Financial Secretary to the Treasury (Sir Edward Boyle): I would refer my hon. Friend to the Report of the Public Accounts Committee for 1960–61 paragraphs 14 to 23, which set out the machinery in question.

Mr. Shepherd: Is my hon. Friend satisfied that a combination of architects, academic authorities and perhaps the Treasury and the Ministry of Works is satisfactory for the purpose of ensuring the most economic use of these resources?

Sir E. Boyle: My hon. Friend is right to draw attention to this matter. Techniques in building economy are always developing, not only in university building, but over the whole range of building, such as schools, hospitals and housing. There is always room for progress, but a good deal has already been done, as my hon. Friend will find if he looks at this Report.

Incomes Policy

Dame Irene Ward: asked the Chancellor of the Exchequer what machinery he has in mind to deal, in accordance with his policy on incomes, with the cases where undertakings have been given that special arrangements will be made to cover their circumstances such as the nurses, the university teachers and the probation officers.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I believe that the existing machinery will be adequate to deal with these cases.

Dame Irene Ward: First, is my right hon. and learned Friend aware of what the Home Secretary said in the House foreshadowing special machinery? Why cannot the House know what that special machinery is? Secondly, may I have an assurance that by Thursday at least there will be a statement on what happened in another place yesterday with regard to probation officers and on whether the nurses and university teachers will have the same benefits as were outlined by the noble Lord, Lord Dundee, in another place yesterday? Could the discrepancy between the House of Commons and another place please be straightened out in a statement so that the House of Commons knows exactly where these people stand?

Mr. Lloyd: If my hon. Friend will read the HANSARD report of the discussion in another place yesterday, she will not find herself under any uncertainty as to the position. With regard to her first supplementary question, I have no comment to make.

Mr. Callaghan: Does not the Chancellor of the Exchequer realise that the statement made last week on the pay of these groups and the statement in another place yesterday led people to believe that there was some intention on the Government's part to remedy the gross injustice being done to these groups? Has not the right hon. and learned Gentleman anything further to say? If not, the Government's reputation for double-talk will become even greater than it is at present.

Mr. Lloyd: To deal first with what was said in another place yesterday, since this was a statement of Govern-

ment policy, I think I am entitled to quote what was said. My noble Friend the Minister of State for Foreign Affairs stated:
My right hon. Friend the Home Secretary announced in the House of Commons on May 10 that the Government were in no doubt that the Probation Service ought to receive a substantial increase of pay at the appropriate time, and he has made it clear that the Government are ready to examine the wider claims of the Service at the beginning of next year. The problem is to find a way of revaluing particular and deserving services without departing from the general policy of linking wage increases to increases of productivity."— [OFFICIAL REPORT, House of Lords, 4th June, 1962; Vol. 241, c. 457.]

Mr. Callaghan: Does that mean that the Government are ready to implement the Morison Report and to give the probation officers the recommended increase?

Mr. Lloyd: I have nothing to add to what my noble Friend said on this point. This is a matter for consideration at the appropriate time, but we recognise that this is a special case. Exactly the same applies to the nurses. We have accepted the fact that there should be a reexamination of the pay structure of the profession, and my right hon. Friend the Minister of Health has, with the management side, set in process means for considering that matter.

Dame Irene Ward: Does my right hon. and learned Friend honestly think it fair to talk in these generalities about what will happen at the beginning of the year? Is he aware that what he said about the management committee and the staff side is not quite accurate, because there are certain outstanding points to be decided by the staff side with the management committee before the revaluation starts? Will he kindly say Whether he will make a statement about how the machinery will operate in order to meet the revaluation to which the Home Secretary referred, as my right hon. and learned Friend is not backing up what the Home Secretary said?

Mr. Lloyd: With regard to the nurses, it would be wrong for me to make any statement (If tth4. mart that my hon. Friend requites. The proper machinery is in process of reconsidering the pay structure of the nursing professions. That process has been initiated, and I hope that progress will be made in it. I gather


that there are to be discussions. There is the prospect of an early meeting. It would be wrong for me to interfere in this process.

Cost of Living

Mr. Ridsdale: asked the Chancellor of the Exchequer how much the rises in the cost of coal, gas, electricity and fares have contributed to the increase in the Cost of Living Index in the last twelve months.

Mr. Selwyn Lloyd: Rather over half a point, of which the rises in the cost of coal and coke have contributed just under one-tenth of a point; gas just over one-twentieth of a point, electricity just over one-tenth of a point and fares three-tenths of a point.

Mr. Ridsdale: Is it not a fact that part of the increase in the price has been due to the need to meet capital requirements? Is it fair that people in the lower income groups should have to contribute to those capital requirements? Would it not be possible, especially in the case of the electricity industry, for the industry to go to the market for its capital rather than raise capital out of the lower income groups?

Mr. Lloyd: My hon. Friend is raising a very wide matter which was dealt with in the White Paper, Cmnd. 1337, dealing with the financial and economic obligations of the nationalised industries. That is a wide matter for debate and is not appropriate for question and answer.

Mr. Channon: Will my right hon. and learned Friend recall what the Economic Secretary said last week on the subject of fares, and will he draw the attention of the Minister of Transport to the serious effect which fare increases have on the travelling population?

Mr. Lloyd: I listened to my hon. Friend's excellent speech on this matter.

Trustee Savings Banks (Cheques)

Mr. Wainwright: asked the Chancellor of the Exchequer if he is now prepared to grant permission to the trustee savings banks to have a cheque-book system.

Sir E. Boyle: It is not yet possible to announce a final decision.

Mr. Wainwright: Does not the hon. Gentleman realise that he is taking too long on this issue? Is he not aware that in the very near future more wages and salaries will be paid directly into the banks and that cheque books will become a major necessity for workers in this country? When will the Government do something about this? Is the delay because some of the big banks object to cheque books being held by depositors in the trustee savings banks?

Sir E. Boyle: I have some sympathy with the hon. Gentleman in this matter, which I have considered. Since the end of April, 1960, the initiative has lain with the Treasury for less than two months. I hope that there will be a meeting with the joint stock banks in the very near future. Their co-operation would be essential to the success of a trustee savings bank cheque service. I agree with what the hon. Gentleman says and hope that there will be rapid progress in this matter.

Mr. W. R. Williams: When the Chancellor of the Exchequer is considering this scheme, will he also speed up consideration of the much better and wider scheme of the Giro system in the Post Office?

Sir E. Boyle: I thought that the hon. Gentleman might raise that point. I have nothing to add to what my right hon. Friend the Postmaster-General said in answer to the hon. Gentleman on 27th March.

Scottish Shale Oil Industry

Mr. W. Hamilton: asked the Chancellor of the Exchequer what estimated increase in the hydrocarbon oil revenue will result from the closure of the Scottish shale oil industry.

Sir E. Boyle: About £½ million a year.

Mr. Hamilton: Does the hon. Gentleman think that the financial gain more than offsets the social disadvantages arising from the consequent closure of the shale oil mining industry together with the resultant closures of the coal mines associated with that industry? Does not he consider the social consequences of his action much more important than the financial advantages which he might derive?

Sir E. Boyle: As the hon. Gentleman knows, this is not purely a revenue matter. The eventual withdrawal of the duty preference in 1964 will be dictated by our international obligations under the E.F.T.A. Convention. We have debated this matter on many occasions during the passage of the Finance Bill, and I think that the House can fairly feel that it has taken a decision on it.

Universities (Grants)

Mr. Wainwright: asked the Chancellor of the Exchequer if he will give the total amount granted for the development of universities and for university education for the quinquennial period ending 1961–62, and the amount by which that sum has been effectively reduced as a result of the devaluation of the £ sterling.

Sir E. Boyle: The total requested in the first part of the Question is £307 million. It is not practicable to perform the calculation requested in the second part of the Question because the total is made up of yearly amounts on a rising programme and includes supplementary grants for increased salaries and other costs during the five-year period.

Mr. Wainwright: Does the Financial Secretary say that universities cannot take into account erosion of the amount which would be granted at the beginning of the quinquennium? Is he aware that even his own university has lost £300,000 in value in the last quinquennium due to the erosion of the grant? How does the hon. Gentleman and the Government expect us to have the best universities in the world if we allow the grant to be eroded at the present rate?

Sir E. Boyle: The figure of £307 million which I mentioned is the total of all grants made available for current and capital expenditure during the past quinquennium. In the next quinquennium, without taking account of any allowance for rising costs or changes on review of salaries, grants for current expenditure alone will be as much as £329 million. Those are striking figures. My right hon. Friend the Chief Secretary to the Treasury has made it quite clear on a number of occasions that any increase attributable to improvements

in academic salaries will be met by additional grant. The Government have also undertaken that further increases in building costs will be sympathetically considered.

Mr. Wainwright: Is the hon. Gentleman saying that he is quite satisfied with the amount of money made available and the number of places in the universities? Is he aware that in California, for instance, 50 per cent. of students of the relevant age group will be able to go to university before 1965? Cannot we have more money for our universities to provide more places?

Sir E. Boyle: With great respect, we have debated this question already and we cannot debate it again at Question Time. I was not so much expressing satisfaction or dissatisfaction as reminding the House of figures which I think are striking and which seem to have been neglected in public debate on this matter.

Mr. Callaghan: Whatever the figures, is it not the case that young men and women whose ability and talents command places are to be denied the opportunity because of insufficient finance?

Sir E. Boyle: As long as the relevant age group is rising we hope that a constant proportion will get to the university. After that, a larger proportion will get in, and I do not think that that is a record to be ashamed of.

Regent's Park Terraces (Expenditure)

Mr. Parker: asked the Chancellor of the Exchequer what sums of money were spent in the period 1945–51, and since 1951, on the restoration and repair of York Terrace West, York Gate West, Clarence Terrace and Sussex Place, Regent's Park.:

Mr. Selwyn Lloyd: Most of this work has been done by lessees and information on their expenditure is not available to the Crown Estate Commissioners.

Mr. Parker: Is it not wasteful first to spend a lot of money on restoring these buildings and then to demolish them?

Mr. Lloyd: The work was necessary so that they could be used as they have been used in the last seventeen years for the purposes which the hon. Member


knows. On the question of the proposal to demolish them, the Crown Estate Commissioners are about to make a statement and I think that we had better await it before making further comment.

Oral Answers to Questions — TRADE AND COMMERCE

Northumberland

Mr. Mackay: asked the President of the Board of Trade how many companies enlarged their establishments, and how many new factories were commenced, in Northumberland, excluding the city of Newcastle, during the two years 1960 and 1961; and what additional employment resulted, both male and female.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson): In 1960 and 1961 in the parts of Northumberland outside the area covered by the Newcastle, Elswick and Walker Employment Exchange areas 12 extensions were completed; the number of new factories begun was seven; two sets of premises were turned to industrial use, and five firms were allocated space in Government factories. The employment expected from these developments is 850 males and 776 females.

Mr. Mackay: It is very pleasing to hear that something is being done, but is the hon. Gentleman aware that there is a good deal of anxiety in Northumberland and that it is hoped that the Board of Trade will proceed with more determination to improve the situation?

Mr. Macpherson: I note what the hon. Member says. We have added two areas to the list of development districts in Northumberland.

Mr. Popplewell: Does the hon. Gentleman realise that the figures he has given do not compensate for the actual jobs lost in the area during this given period of time? Will he do something to see that even more industrial development takes place in the area? Is he aware that with the closing down of mines, and the like, far more personnel are being lost to industry than the figures indicate?

Mr. Macpherson: We are aware of the problem and are concentrating on the worst areas.

Mr. Mackay: asked the President of the Board of Trade how many vacant sites for factories there are in Northumberland county; and what information he has as to the companies which are making inquiries, with a view to using these sites where very good transport facilities exist.:

Mr. N. Macpherson: The main industrial sites in the county of Northumberland are described in a booklet produced by the county council; I am arranging for a copy of this booklet to be sent to the hon. Member. Close and regular contact about these sites and the facilities available is maintained with the county planning authorities by the Board of Trade regional officials, who have brought them to the attention of a number of firms making inquiries about locations for expansion. I could not give the hon. Member information about individual firms' inquiries without disclosing information given to the Board in confidence.

Mr. Mackay: I am glad to hear that something is being done. But may I ask whether the Minister has attempted to explain what a splendid part of the country this is and how there are facilities by sea, splendid towns, and a great background of country? Will he try to do a little better for Northumberland?

Mr. Macpherson: I am visiting Northumberland at the end of this week.

Oral Answers to Questions — NUCLEAR TESTS

Mr. A. Henderson: asked the Prime Minister whether he will instruct his representatives at the Geneva Disarmament Conference to propose a test ban treaty, banning all high altitude and atmospheric tests, to be controlled by existing means of detection, together with a temporary moratorium on underground tests pending further scientific examination of the means of detecting such tests.

The Prime Minister (Mr. Harold Macmillan): I recognise that the right hon. and learned Gentleman, like Her Majesty's Government, is anxious to try anything which may result in an acceptable solution of these difficult problems. The difficulty about his present proposal


is that a temporary moratorium might turn out to be a very long moratorium and there would be no certainty that the Soviet Government were observing it.

Mr. Henderson: Is it not time that Her Majesty's Government looked ahead to the conclusion of the present American series and the projected Soviet series of tests, and should they not propose a test ban treaty to come into operation on that date banning all high-altitude, atmospheric and underground tests, to be controlled by existing instruments, as suggested by the scientist, Professor Don Leet, and make provision for the minimum amount of verification?

The Prime Minister: That is broadly the sort of proposal we have tried to get through. The difficulty still remains in the last sentence, in the right hon. Gentleman's phrase about a reasonable amount of verification.

Mr. Grimond: While sympathising with the Government's difficulty in dealing with the Russians over this matter, may I ask whether the right hon. Gentleman is advised that by underground testing alone a really significant advance can be made in nuclear warfare?

The Prime Minister: It has its considerable importance, and I do not think that at this stage we could contemplate a treaty that was not comprehensive.

Mr. Mendelson: Whilst recognising the importance of the element of verification in these matters, may I ask the Prime Minister whether he has seen the new proposal made by Mr. Erlander, the Prime Minister of Sweden, in support of the proposals made by the eight neutralists, which would allow for an invitation to be sent by the Government concerned and for inspection by agreement? Would the right hon. Gentleman give the Government's support to the Swedish Prime Minister in this initiative?

The Prime Minister: There are all sorts of variations of the possible way out, but so far they have all come to grief on the very point which the hon. Member mentioned.

Mr. Henderson: Can we take it that the Prime Minister is expressing the support of Her Majesty's Government for the proposals contained in my

Question provided that the Soviet Union is prepared to agree to a minimum amount of verification in cases of dispute?

The Prime Minister: We have first to settle and get further information about the system of instrumentation and then, even if we have that settled, there is the vital question of verification.

Mrs. Castle: asked the Prime Minister whether his scientific advisers have now had an opportunity of studying the claims of Professor Lewis Don Leet to have discovered a scientifically incontestable method of detecting underground nuclear tests; and whether he will make a statement.

The Prime Minister: As I said on 22nd May, we are always ready to look at this or any other new discovery or claim. Such evidence as is available in support of Professor Leet's claims is being studied by our scientific advisers.

Mrs. Castle: When this study is complete, will the Prime Minister inform the House of Commons of its outcome? In the meantime, is the right hon. Gentleman aware that no one really knows what will be the scientific consequences of the proposed American tests of Rainbow bombs, and will he, therefore, even at this eleventh hour, plead with the United States to postpone them in order that we may see whether a test ban treaty could be negotiated in the light of this new evidence?

The Prime Minister: There is certain evidence from scientists on the problem of the machines or the instrumentation necessary to discover whether an explosion is due to artificial or natural means. On that, there are, of course, a large number of experts. Sometimes these experts do not all agree. There is then the second stage, to which the right hon. learned Member for Rowley Regis and Tipton (Mr. A. Henderson) referred earlier. Even if that first stage were dealt with, as I believe it can be in time, and made more perfect, there is the question of on the spot verification.

Mrs. Castle: Will the Prime Minister inform the House in due course whether his scientific advisers believe or do not believe that Professor Lewis Don Leet's method of verification is sound?

The Prime Minister: So far, we are studying this publication in a magazine in the United States, but it is a very complicated and detailed subject and I think that our scientists must have opportunity to consider it carefully.

Oral Answers to Questions — MINISTER OF HEALTH

Mr. Bowles: asked the Prime Minister whether he will promote the Minister of Health to full Cabinet rank.

The Prime Minister: It is not possible to include in the Cabinet all Ministers in charge of Departments. But it has been made clear, I think by successive Administrations, that it should not be inferred from this that the Government underrate the importance of the matters for which Ministers outside the Cabinet are responsible.

Mr. Bowles: Would the Prime Minister realise—as I gather he does—that a tremendous number of people depend upon a really powerful Minister of Health for their welfare and hospitals and so on, and will he reconsider this matter when he has his next reshuffle of the Cabinet?

The Prime Minister: Of course, we have a very excellent Minister of Health. What particular Minister should or should not be in the Cabinet is not a matter of rule. It is a matter of arrangements at any particular time.

Oral Answers to Questions — FOREIGN DECORATIONS

Sir J. Langford-Holt: asked the Prime Minister what conclusions he has reached on his consideration of the need to advise an amendment of the regulations forbidding Her Majesty's subjects to wear decorations which they have been given permission to accept from foreign States.

The Prime Minister: The regulations governing the wearing of foreign decorations have been under review, but I am not in a position to make any statement.

Sir J. Langford-Holt: May I first declare no interest whatever myself in this Question? Would my right hon. Friend bear in mind that, excepting perhaps in some recesses of the Foreign Office, everyone in the country believes

that while there is some justification for saying that people in this country should not accept foreign orders, or orders from certain foreign countries, there is absolutely no logic in a rule which says that an order is fit to be received but not fit to be worn?

The Prime Minister: There is a very long history behind this. It started, I believe, with the first Queen Elizabeth, who is supposed to have observed, perhaps rather discourteously:
My dog shall wear no collars but mine.
Since that time there has been the system of accepting these decorations with the Queen's permission, and the question at issue is on what occasions they ought to be worn by British subjects.

Sir J. Langford-Holt: Could I have my right hon. Friend's assurance that he will take a serious new look at these regulations which, as he has said, are very old and are somewhat out of date in this modern age?

The Prime Minister: We are looking at them, but this is a rather technical matter.

Oral Answers to Questions — AUSTRALIAN PRIME MINISTER (TALKS)

Mr. Healey: asked the Prime Minister if he will make a statement on his official talks with the Prime Minister of Australia.

The Prime Minister: I am very glad that the Prime Minister of Australia has been able to come to London for discussions. Our talks, are of course, confidential.

Mr. Healey: Can the Prime Minister say whether there is any precedent in Commonwealth history for the direct public criticism which the Prime Minister of Australia felt compelled to make of Her Majesty's Government's failure to protect Australia's interests in the Common Market negotiations? In view of this very disturbing state of affairs, has the Prime Minister been able to assure Mr. Menzies that last week's agreement will not constitute a precedent and that, in particular, Her Majesty's Government will accept no transitional arrangements for Commonwealth agricultural products and Asian


manufactures which do not firmly guarantee comparable outlets for the permanent period which follows the end of the transitional arrangements?

The Prime Minister: What we are trying to do is to carry on this negotiation stage by stage. We may reach certain points on which it is possible to arrive at agreement, or we may not. When these provisional agreements are made, then will be the time for us all, the Commonwealth Prime Ministers, Her Majesty's Government and the House of Commons, to reach a conclusion.

Mr. Smithers: Is it not a prime interest of Australia that this country should have a strong and stable economy, and will not this be forwarded by our entry into the Common Market on suitable terms?

The Prime Minister: Yes, Sir; I think that that is fully recognised by the Prime Ministers of the Commonwealth countries.

Sir C. Osborne: Will my right hon. Friend stress to the visiting Commonwealth Prime Ministers or leaders that in all these difficult talks the British people have their own rights and their own interests and they have a perfect right to state what their interests are and to protect them? If the Commonwealth leaders do not wish us to go into the Common Market, should they not make an offer themselves to increase trade with the United Kingdom?

The Prime Minister: I think that these are all questions I would rather leave. We have these frank and very old friendships, especially with the Prime Minister of Australia. We have known one another in war and in many troubles. The Prime Minister and I talk frankly and freely to each other, and I am sure that his visit is of great benefit to us.

Mr. Healey: Will the Prime Minister bear in mind that very many of us on both sides of the House regard the maintenance of the solidarity of the Commonwealth as a multi-racial association as a first priority of British policy, and we do not consider that we should sell the Commonwealth down the

river, even on the instalment system, for the sake of temporary economic benefits to this country?

The Prime Minister: It is just because many of us feel that the close association of Britain with Europe will strengthen Britain and in that way strengthen the whole Commonwealth that we have entered into these negotiations.

Oral Answers to Questions — CIGARETTE ADVERTISING

Mr. Frank Allaun: asked the Prime Minister if he will now state the Government's policy with regard to cigarette advertising.

The Prime Minister: I would refer the hon. Member to the replies which I gave to Questions on this subject on 17th May.

Mr. Allaun: Since it is three months since the Royal College of Physicians issued its report, will the Prime Minister now say When the Government will make up their mind? What is the objection to the recommendation at least to end cigarette advertising on television? Is such objection coming from commercial interests or from the Treasury?

The Prime Minister: Several steps have been taken by my right hon. Friends the Secretary of State for Scotland, the Minister of Education and the Minister of Health, through the local health and education authorities. These are proceeding. There are other questions which will require further consideration.

Mr. P. Noel-Baker: Does the Prime Minister recall that on 17th May he referred us to the report of the Advertising Inquiry Council on the subject of tobacco advertising? Will he arrange that that report is very widely distributed among the nationalised industries, local authorities and others who have advertising space to sell?

The Prime Minister: There are separate Questions on the Order Paper about the Advertising Inquiry Council's report, so perhaps I ought not to anticipate the reply.

Oral Answers to Questions — PRESIDENT DE GAULLE (VISIT OF PRIME MINISTER)

Mr. Rankin: asked the Prime Minister if he will make a statement on the outcome of his consultations with President de Gaulle.

The Prime Minister: I would refer the hon. Member to the joint communiqué issue after our talks.

Mr. Rankin: Has the right hon. Gentleman found time this morning to refresh his recollection of what happened when he was with President de Gaulle in regard to the various arrangements Which have been made? Will he say whether it is true that he is now so keen on entering the Common Market that he is prepared to abandon Commonwealth preferences and Commonwealth ties and also to make no claim to any special relations with Washington?

The Prime Minister: A communiqué was issued. The talks were private and no one was present except President de Gaulle and myself and our two private secretaries. When meetings of this kind take place and a communiqué is issued, it is not wise or even courteous, I think, to go beyond what is agreed to be said. What was said was that we felt that the broad spirit of close unity of purpose between France and Britain should animate the discussions and negotiations which have to continue during the next two or three months at Brussels.

Mr. Ridsdale: Could the Prime Minister say whether he met in France at the weekend the same attitude as some of us met in Western Germany, namely, "Why should we listen to a great deal about what is being said about the Commonwealth when, after all, many people in the by-elections are voting Liberal, and do not Liberals want to go into the Common Market at any price"?

The Prime Minister: The President of the French Republic, with his long experience, recognises, as we all do, the enormous importance of the Commonwealth and of maintaining the strength of the Commonwealth as one of the strengths of the free world. The problem is whether we can or cannot reconcile these two purposes, the strength of

the Commonwealth and the entry of Britain into special arrangements with European countries.

Mr. H. Wilson: As the House will be debating the Common Market for two days, and since the attitude of President de Gaulle to this matter is recognised to be of almost fundamental importance at the present time, will the Prime Minister go a little beyond some of the clichés he has been using and inform the House whether he is in fact now satisfied about President de Gaulle's attitude to Britain's application for entry and whether it is true, as has been widely stated, that we have been told that, if we just sign the Treaty of Rome, we can go in, but there will be no special facilities for the Commonwealth? Will he tell the House also whether he took the opportunity of expressing to President de Gaulle the view shared, I think, on both sides of the House that it would be advantageous to European and world peace if France would now cease the effort to became a major nuclear Power?

The Prime Minister: These are very disconnected subjects. I do not think that it would be proper far me to discuss or express my view upon the last point the right hon. Gentleman raised. We have our attitude towards our own defence, which successive British Governments have followed. The French Government have theirs.
What we try to do, with some success, I think—we are very old friends; we have been together as comrades in very difficult times—is to discuss very frankly and freely the problems which we face and the desire, on the one hand, that Britain should be more closely associated with the countries of Europe, which I believe to be wise both economically and politically, and, on the other hand, the absolute importance of maintaining the strength and unity of the Commonwealth.

Mr. Wilson: Does not the Prime Minister recognise the need for the House of Commons to debate frankly and freely the issues we face? [HoN. MEMBERS: "Wait till tomorrow."] I have already said that we are to debate the matter tomorrow. The whole House


knows that, unless we have fuller information about these talks, it will be impossible to debate some of these issues frankly and freely. In the circumstances, will the Prime Minister, if he cannot make a statement now, consider whether he can authorise his right hon. Friend to tell us a good deal more about the content of these talks? Further, is he aware that, according Ito the Guardian, the Prime Minister of France, or one of his officials, has been telephoning British representatives of British newspapers giving what may be, for all we know, a very slanted account of the talks and the British Prime Minister's attitude? Will the right hon. Gentleman say something to counter that?

The Prime Minister: I have had some experience of these discussions with foreign statesmen. I think that it is much better to rest upon the communique when there is one and for the principals concerned to recognise that the whole purpose of such conversations is that they should be confidential, carried out on a very free and frank basis, and that far the best final comment is whether or not this helps to the solution of the problem.

Oral Answers to Questions — QUESTIONS TO MINISTERS

Mr. Speaker: The hon. Member for Anglesey (Mr. C. Hughes) had a point of order on Question No. 4 and courteously accepted my suggestion to defer it. I do not think that he is here now. I will write to him.

BUSINESS OF THE HOUSE

The Chancellor of the Duchy of Lancaster (Mr. fain Macleod): With permission, I should like to make a short business statement.
In addition to the business already announced for Wednesday, 6th June, the House will be asked to approve the Motions on Immunities and Privileges relating to the International Wheat Council and the Central Treaty Organisation Orders, 1962.

BALLOT FOR NOTICES OF MOTIONS

Incomes Policy

Dame Irene Ward: I beg to give notice that on Wednesday, 4th July, I shall call attention to the incomes policy, and move a Resolution.

Industrial Development, County Durham

Mr. Boyden: I beg to give notice that on Wednesday, 4th July, I shall call attention to the need for new industrial development in County Durham, and move a Resolution.

Industrial Noise (Residential Areas)

Mr. J. Hynd: I beg to give notice that on Wednesday, 4th July, I shall call attention to the problem of industrial noise in residential areas, and move a Resolution.

ADJOURNMENT (WHITSUNTIDE)

Motion made, and Question proposed,

That this House at its rising on Friday do adjourn till Tuesday 26th June.—[Mr. lain Macloed.]

3.35 p.m.

Mr. Michael Foot: I wish to oppose the Government's Motion. I should like to explain at the outset that it would be hypocritical of me to deny that, when the Leader of the House announced a few days ago that the House at the Whitsun Adjournment would have a Recess of just over two weeks, I shared the sense of relief which many hon. Members may have had. Nor do I wish, in opposing the Motion, to raise in any sense the demagogic argument that M.P.s are not doing their duty or performing their functions when the House of Commons is not sitting. All of us know that Members of Parliament require to have periods when they can make extended visits to their constituencies or when they can do other of their duties without which they cannot perform their duties in this House.
Therefore, in opposing the Motion today, I am not in any sense saying that it is necessary, right or desirable that the House of Commons should be in something like permanent session. I think that that would be disastrous. It would certainly be disastrous for the Government. It would also be inadvisable for Parliamentary institutions as a whole. My argument in opposing the Motion today is specifically directed to the immediate Parliamentary situation which we have to face.
I must confess that, in the light of that situation, I was rather surprised when the Leader of the House said that the House was to adjourn for just over a fortnight. I am sure that the Leader of the House can produce precedents to show that there have been many occasions when the House has adjourned for two weeks, or even more, at Whitsun. However, I do not think that that is an argument that he can cite effectively on this occasion. I could cite cases where the business of the House of Commons has been considered sufficiently urgent for the House to be adjourned only for a period of a week or less at Whitsun.
If that is the case and if there are precedents on both sides about the period

which is permissible or customary at Whitsuntide, I submit that the only question before the House now is whether there are topics of great urgency which the House has so far not been able to debate and which we should have time to debate. That is the ground upon which I oppose the Motion.
I have no doubt that other hon. Members will wish to cite other topics which they wish to have discussed. I wish to direct the attention of the House in particular to two major subjects which I should have thought that everybody in the House, whatever view they may have about them, would agree should be debated on the Floor of the House. I know that all my hopes are not fulfilled, but I should have hoped that most hon. Gentlemen would agree that it is right that these subjects should be voted upon as well as discussed.
The first subject which the House has not debated fully is the subject of the H-bomb tests now being carried out by the United States, with the full approval of the British Government, and partly with the assistance of facilities provided by the British Government. We have not been told in the House what is the scale of these H-bomb tests being conducted by the United States, but from the answers which have so far been extracted from the Government it may very well be the case that the series of H-bomb tests now being conducted by the Americans are the largest series of H-bomb tests ever conducted in the history of the world. It may be proved subsequently, on adding up the total of megatons that the Russians have exploded, that their last series of tests was somewhat bigger, but nobody knows for certain yet.
Whatever any hon. Member may think about these matters and however convinced some hon. Members may be that it is right for the Americans to proceed with these tests, we should surely have the right to debate the matter fully in the House. That right has been denied. On a number of occasions during the last six or seven weeks my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) and others have pressed the Government to give a full day to discuss these H-bomb tests. On several occasions the Leader of the House has


used as his argument in denying us the right to have such a debate, not that the subject is not important, but that he does no; believe that there is sufficient division in the House for the matter to be debated.
There are many features connected with this series of H-bomb tests which make it all the more necessary that it should be debated in the House. We had an illustration of this state of affairs in the reply given by the Prime Minister only a few minutes ago in answer to a Question tabled by my hon. Friend the Member for Blackburn (Mrs. Castle). The Prime Minister, almost in as many words, replied, Well, these are very difficult technical matters". On earlier occasions, in reply to similar Questions, he has said, "These are questions which cannot be settled or debated or examined properly at Question time". Everybody who listened must have agreed with that. If that is the case, there is all the more reason why the matter should be debated in the House.
There are several new features connected with this series of H-bomb tests which make it imperative that the matter should be debated in the House of Commons. First, there are the new technical discoveries referred to by my hon. Friend the Member for Blackburn. There are very important discoveries which might affect the whole question whether verification is necessary or in what circumstances it is necessary. That is one feature which we ought to debate in the House. There has been no full debate about it.
A second most important feature—not entirely novel, but in some respects novel—is that the Americans propose to conduct—possibly tomorrow or the day after; this week, it is now said—a series of high altitude tests. There is great dispute between the scientists of the world as to whether it is proper or right for high altitude tests to be conducted. It is an extremely difficult matter for any layman to decide, but, as far as it is possible for people to discover, it appears that in the main the scientists who favour the high altitude tests being conducted or who think that there is no danger in their being conducted are scientists in the pay of the Governments —the British or the American Government.

Mr. Speaker: Order. I think that the hon. Gentleman goes a little too far. We cannot debate the relative merits of these activities at this time. It is quite in order for the hon. Gentleman to indicate that he desires to discuss the matter and, therefore, argue that we should not go away for this length of time, but we cannot go into the merits on this Motion.

Mr. Foot: Mr. Speaker, I was doing my very best to be strictly within the rules of order, because I was not discussing the merits of whether these high altitude tests should be conducted. I was seeking to stress that these are new features that make it all the more important that the matter should be debated in the House. I suggest to you, Mr. Speaker, that it is proper for me, in pointing out why it is so essential to have a debate on the subject, to say that there are new features and big differences of opinion amongst scientists about this which make it all the more reprehensible that the matter has not so far been discussed in the House. That is the second reason. On this series of tests there is a big dispute amongst the scientists. The Government-paid scientists on the whole are on one side—

Mr. Speaker: Order. I think that the hon. Gentleman has not followed. It cannot materially contribute to the length of time for which we should go away for the Recess whether the scientists on one side are in the employment of Governments or somebody else. It is sufficient to say that it is a matter of dispute between scientists.

Mr. Foot: I will not repeat what I was saying. It would be quite wrong for me to do so. I should have thought that the more I can illustrate how grave is the difference of opinion amongst the most eminent scientists in the world, the more that is an argument why the matter should be debated in the House of Commons. That is the second feature connected with these tests which makes it utterly deplorable that the House of Commons should not be afforded a debate on the matter.
There is a third consideration which has often been put by my right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker), who put a question


to the Prime Minister about these tests a few minutes ago. My right hon. Friend has stressed, both in the House and in letters to The Times, that this series of American tests was started at the very moment when a new initiative was being taken at Geneva by the neutral nations which might conceivably have prevented the tests from going ahead at all.
These are new factors. After all, however expert and knowledgeable we may be in these matters—I do not profess to be so—we are dealing now with something about which even the scientists do not know. There is, therefore, a very grave responsibility on the House. Before Britain gave her approval to these tests being conducted, we should have had the fullest possible examination in the House. Whatever view any hon. Gentleman may take about the issue, I do not see how that proposition can be contested.
But it has been contested. It has been contested time and again by the Leader of the House. He has said, "I admit that this is an important matter. I am not trying to minimise its importance, but because I have no opposition to these tests from the Labour Front Bench I am entitled to arrange the business of the House so that we do not have a full debate upon it." The Leader of the House might say, "We had a foreign affairs debate in which the matter could have been raised." It is true that one or two hon. Members raised the matter. My right hon. Friend the Member for Belper (Mr. G. Brown) raised it. He had to raise other matters in his speech, because many other matters were compressed into that debate. However, speaking for myself and for my hon. Friends here, none of us was able to participate in that debate or express our views upon it. Many other hon. Gentlemen who wished to express their views on the subject of this series of tests were denied the right to do so.
Therefore, the Leader of the House is responsible for arranging the business of Parliament during the last six weeks, when the biggest series of H-bomb tests ever carried out in the history of the world has been conducted, in such a way as to deny the House the right to debate the subject fully. The respon-

sibility rests primarily on his shoulders, although it rests partially also on the Labour Front Bench, because the Labour Front Bench could have forced a debate on the subject if it had wanted to do so. No hon. Member would deny that. If the Opposition had demanded a full day's debate on H-bomb tests, we could have had it.

Mr. Speaker: Order. Whether or no the Opposition could have demanded a debate in the past is not relevant to the length of time for which we now go away.

Mr. Foot: Mr. Speaker, I would try to persuade you that it is relevant. I want the House to reject the Motion. If the Motion were rejected, the Government would have to come forward with a new proposal as to the time at which the House should meet again. I am asking, as I will develop at the end of my speech, that the House should meet either next week or the week after so that we can discuss the matters to which I am now referring.

Mr. Speaker: I have not got over plainly to the hon. Gentleman what is in my mind. All that, the desirability or not of rejecting the Motion and the consequences which he has in mind, is wholly unaffected by whether or no the official Opposition in the past have not demanded a debate or are responsible for not demanding a debate.

Mr. Foot: I submit, Mr. Speaker, that what I was saying was directly relevant. If in fact we have not had an opportunity of a debate on this subject, that is partly my argument for having one.

Mr. Speaker: The point of the hon. Member's present argument is made by saying that we have not had such a debate. The reasons for our not having had such a debate are irrelevant to this issue.

Mr. Foot: You say so, Mr. Speaker, but if I am allowed to say that we have not had such a debate, am I not also to be allowed to give my interpretation of why we have not had such a debate, which I should have thought would reinforce my argument that we should have one? That would be limiting my remarks by the rules of order.

Mr. Speaker: I take that view and so limit it.

Mr. Foot: I hoped you would not say that I must stick strictly to what you said and not be allowed to say more than that we have not had a debate in the past. I should think I could produce arguments why this House should not adjourn for so long and not be able to discuss matters which we have not discussed before.
That is my first reason for saying that this House should not accept the Motion. It is utterly intolerable that the British House of Commons, for whatever reason that I am not allowed fully to explain, should be denied the opportunity of having a full debate on this subject. That is one major issue. Whatever one may think, or whatever the rules of order, no one can deny that it is a matter of supreme importance for the human race.
I take the second case in which the Leader of the House has resorted to the same method to try to prevent a proper debate and a vote in the House. I do not need to go through all the incidents which led to the result, but everyone in this House knows the result on the question of the dispatch of troops to Thailand. British troops have been sent to Thailand. This House has had no full opportunity for debating that matter. One of the reasons why I am opposing the Government's Motion is that I want there to be a debate on that subject and, if possible, a vote in this House on that subject.
We had some discussion in the same foreign affairs debate, when all these matters were compressed together and there was some reference to this subject, but it was impossible to have a full debate upon it. Startling statements were made in that debate. We had the statement that if the Thailand Government demands that British troops should be sent there, they have to be sent. With the aid of the Deputy Leader of the Opposition, that presumably was the Government's view. If that is the position, that if countries covered by the S.E.A.T.O. pact demand troops to be sent there we are absolutely bound to send them, it is all the more urgent that the matter should be debated in this House and voted upon. I do not think that is the proper interpretation of the treaty, nor that it gives proper status to this House.
It does not give proper status to the House of Commons that, if British troops are sent abroad, we should be denied the right of having a debate and a vote; but that was the result of the Government's action, assisted by the official Opposition. We have been denied the right to debate these two matters of primary importance. The first I believe to be the more important, but at any moment the second, the dispatch of troops to Thailand, could turn into an event of enormous significance. Before the House reassembles, there could be a crisis in Laos, and we have no guarantee that the troops will never be used in Laos. The Leader of the Opposition asked the Government for answers about this. He did not get any answer, but that did not prevent him supporting the Government. We have had no adequate answers on the question of Thailand.
In the House yesterday there was an attempt by the Government to mystify and to conceal the facts about why the troops had been sent there and what was the threat. Questions have been asked about why this matter was not referred to the United Nations. If there is a threat in Thailand, the matter ought to have been referred to the United Nations. If there is no threat, British troops should not be there. If hon. Members think it absolutely right that these troops should go to Thailand, how can they defend the proposition that we should be denied the right of a debate on the matter?
Apparently, the reason why the Leader of the House has refused us the right to debate these matters is his new constitutional theory, the new "Macleod doctrine", that however important a subject may be and whatever opposition there may be in some quarters, so long as the official Opposition support the Government there is no need for a debate in this House. That is the doctrine he has enunciated time and again. It is not a doctrine which accords with the traditions of this House.
On the subject of Thailand, there is a Motion on the Order Paper signed by forty or fifty hon. Members opposing the Government's action and saying specifically that they deplore that action particularly because it has been done without the authorisation of the House


of Commons. I am not speaking only on behalf of my hon. Friends who sit on this bench, but on behalf of many other hon. Friends who have signed the Motion protesting against British troops being sent abroad without the authorisation of the House of Commons.
What are these Motions supposed to be? When hon. Members put them on the Order Paper, the purpose is that the matter should be debated. The Leader of the House becomes very cynical and regards them as pious essays in impotence. He does not care about them, but I think they should be treated seriously. They should be regarded as matters of some importance. When forty or fifty hon. Members say that they are apposed to British troops being sent abroad, particularly when that is done without Parliament agreeing to it, I should have thought, however cynical the Leader of the House might be about such a matter, he should try to arrange a debate on it.
On the question of H-bomb tests, there is a series of Motions on the Order Paper attacking the Government's attitude.
All this, apparently, is brushed aside by the Leader of the House. We are not asking the Government to upset their time-table or to disrupt their whole programme. All we are saying to the Government is, "How can you deny us the right to debate and, if possible, to vote upon these matters in the British House of Commons? How can we discharge our duties to our constituents properly if this is denied?"
How does the Leader of the House, or any other hon. Member, think that it will assist the dignity of this House if the idea gets abroad that debates on matters of such supreme importance as the two I have mentioned are to be prevented, by whatever method, whether by connivance between the two Front Benches or the edict of the Government, from being debated? There cannot be any conceivable reputable Parliamentary reason why, when we are supposed to be going away for a fortnight, we should not meet a week earlier to debate these matters.
I seriously ask the Leader of the House to withdraw this Motion and to bring

forward another Motion which would enable us to come back a week earlier so that we could discharge our duties to our constituents and say on the Floor of the House of Commons what we think about these matters. Do not let any hon. Member on either side of the House think that he can discharge his duties to his constituents in some hole-and-corner meeting upstairs, either in the 1922 Committee or at private meetings of the Parliamentary Labour Party. Hon. Members cannot discharge their duties there. The place for Members of Parliament to stand up and say what they think on these matters is here. On these two major issues the Leader of the House is denying us that right.

3.59 p.m.

Sir Harmar Nicholls: We have just been treated to one of the sporadic pieces of showmanship which we often get from the hon. Member for Ebbw Vale (Mr. M. Foot). It is obvious that he opposed the Motion, first, to trounce his Front Bench. He wanted to say that because the Members on his Front Bench had not used Supply days to debate things which he and his hon. Friends had in mind, they were not doing their duty. He was using that to make that attack upon them. That may be his idea of a good use of Parliamentary time, but it is not my idea.
He also used the opportunity to criticise the Government Front Bench. I do not need to defend the Government Front Bench, for right hon. Members on that bench can speak for themselves, but, in trouncing his own Front Bench and wishing to attack the Government Front Bench, the hon. Member was being unfair to Parliament. He was undermining the reputation which Parliament has with the people. He was suggesting that we were deliberately going away on holiday. He said that he would be the last to deny that there were occasions when hon. Members should get back to their constituents to refresh themselves first-hand on problems concerned with what was happening in their constituency.
If there is any basis in that argument —and, of course, there is much—if ever there was a time when hon. Members ought to be in their constituencies refreshing themselves on the views of their supporters, it is now. We have a


great debate starting tomorrow—it is to take two days—on the Common Market. Tremendous things have been happening throughout the world in the last two or three months and we ought to go back to find what strength and support we have in the constituencies.
I say with confidence that although some of the support we had may have temporarily gone away from us and however much the official Opposition Front Bench may have lost support at this moment, I am prepared to state quite clearly that the hon. Member and his six or seven special hon. Friends, the Independent Socialists, have hardly any support in the country at all. There is no need for them to go to their constituencies to find something which did not exist there before.
The hon. Member is an experienced Member who has made a study of constitutional Government. If ever an hon. Member understood Parliament and the impact which speeches made here can have, it is the hon. Member. At this time to try to spread the seeds throughout the country that Parliament is not trying to do its duty on these important matters is forging an irresponsibility which could be disastrous.

Mr. Emrys Hughes: How often does the hon. Member for Peterborough (Sir Harmar Nicholls) come here?
Sir Harmar Nicholls: I hope the House will disregard the rather showmanship type of speech we have had. Even the arguments used by the hon. Member for Ebbw Vale were not very well based. I do not remember any of his hon. Friends suggesting that a Recess should be cut down on another occasion when Russia started tests again. They found Question Time and ordinary debate sufficient in which to criticise Russia. Why is it suddenly necessary when this is happening on the other side of the Iron Curtain to cut down a Recess? The hon. Member and his hon. Friends have had adequate opportunity at Question Time and in debate to discuss the issues he has mentioned. The amount of time they have used on these topics knocks the ground from under his feet. We had a two days' debate on foreign affairs, plus Question Time, to discuss the dispatch of troops abroad and nuclear tests.
I do not think it was right to dismay the country by deliberately suggesting chat we are failing in our responsibility. He suggested that a crisis might blow up about the dispatch of troops to Thailand. He knows very well that if a crisis did blow up, Mr. Speaker has full authority to recall the House. I suggest to the Leader of the House that on this occasion, if not on every previous occasion, the length of time for the Recess is right. We have jobs to do in the country, and I believe we should be doing our duty there instead of riding the hobby-horses of the hon. Member and having to listen to his extremist propaganda.

4.5 p.m.

Mr. J. J. Mendelson: Before coming to my main theme, I want briefly to refer to the constitutional arguments advanced by the hon. Member for Peterborough (Sir Harmar Nicholls). He was suggesting that there was something constitutionally misguided about raising matters of great importance on the Motion for the Adjournment. He must know from his study of the constitution that this is a time-honoured method of not allowing the House to adjourn without bringing to the notice of the Executive some of the matters which are hanging fire and which are of serious importance and which might present future dangers. What my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) has done is nothing more than to exercise the normal rights of a Member of Parliament.
I shall confine myself to asking the Leader of the House for a specific assurance concerning the very dangerous situation in Laos. We have had news from Laos which is directly related to the Parliamentary situation. It is being suggested in Washington that a new crisis of graver impact than the last would arise in Laos if there were a failure of the negotiations just restarted between Prince Souvanna Phouma and the King and, it is hoped, the other two princes.
In an interview last night, Mr. Harriman, who is the President's special adviser on affairs in Laos and South-East Asia, was asked by the interviewer whether the troops which are now committed in Thailand would be used in Laos. It was very easy for Mr. Harriman to give a clear denial, but he deliberately


refused to give such a denial and said that that was not a question which they were discussing at the moment. He described it as an "iffy" question upon which he was not now prepared to pronounce. That highlights the seriousness of the position in Laos, and every one of us is directly concerned with that situation because the Government have committed troops to Thailand.
If by the middle of this month, as has been suggested in reports from Washington, the new effort of Prince Souvanna Phouma should unfortunately have failed—and I shall submit some of the serious reasons which might exist for such a failure—the Government would be faced with a new situation even more dangerous than that which obtained a fortnight ago, because it is quite possible that the American Government would then commit American troops to the territory of Laos. The American Government have been responsible for getting the British Government to agree to the committal of our troops to Thailand. Whatever the form, it is generally accepted in serious political circles that although there was an invitation from Thailand, the original initiative came from the United States Government, a view which is not denied in Washington, where no reason for denying it is seen. If the American Government ask our own Government to allow our troops to be so committed to the territory of Laos at the same time as the Americans commit their troops, I would like a specific assurance from the Leader of the House that Parliament would be immediately recalled before the Government took any such decision.
I should like to ask, secondly, for an assurance that the House would not be presented with a fait accompli if this serious situation should arise, but that the Government will come to the House after recall with a proposal and not with a decision. It is well known that once the Government commit troops, it is extremely difficult for any hon. Member or any group of Members, or even a majority, to demand the immediate withdrawal of those troops if the House does not approve, because the security and safety of the committed men might be involved and I, for one, would not be prepared to demand immediate withdrawal in such

a situation if I were told by the Government that their military advisers had told them that it was not safe to do so.
If the Government come to the House with the announcement that the troops have been committed to the territory of Laos, the power of the House to say "Halt" will have been abolished on this occasion, because it will be virtually impossible to do anything about it. It might be possible after some time had passed to reverse the policy and coerce the Government into undoing what they have done, but that would be a dangerous manœuvre. The proper way to proceed in this situation is for the Government to give the assurance that they will come to Parliament before any final step is taken in the committal of troops beyond the territory of Thailand.
Like every hon. Member, I hope that the negotiations now being conducted in Laos will be completely successful. Some months ago I was one of those who supported the Lord Privy Seal, the Prime Minister and the Foreign Secretary in the policy of bringing about these negotiations. As the Leader of the House knows, the Government have had the support of the Opposition in what has been a sensible policy of insisting that Prince Souvanna Phouma should be the new Prime Minister and that he should hold the Government together. But reports from responsible quarters in Washington suggest that these new negotiations will end in failure. In spite of the recommendations of the Geneva Conference and in spite of the good work done by the two co-Chairmen, one British and one from the Soviet Union, General Phoumi time and again has deliberately sabotaged any attempt to form a Coalition Government. It is suggested in Washington that now that he has achieved what he wanted—the committal of American troops and troops from other S.E.A.T.O. countries to Thailand, he will now use this new situation, having got us to some extent involved, to sabotage the new round of negotiations.

Mr. Speaker: We cannot possibly debate the policy aspects of this matter now. The point is made in connection with this Motion by the hon. Member saying that there is likelihood of failure yet again.

Mr. Mendelson: Having expressed the sincere wish, which every hon. Member


shares, that the negotiations should succeed, I was trying to make plain only briefly why I took these reports from Washington seriously when they suggested that the negotiations might fail yet again. It might otherwise seem ambiguous when I was largely basing my argument on an expectation of failure. I want to make it clear that a great deal depends on the negotiations succeeding, and it was only in that connection that I went into detail.
If in the middle of the month there were to arise a situation in which there were to be new consultations on what ought to be done—and this is something discussed in all the Foreign Offices involved—if Prince Souvanna Phouma, having made the final attempt, then decided to go back to France, as he has announced he would, and if he were not prepared to continue his useful and important efforts to form a coalition and to bring peace to that country, what will the policy of Her Majesty's Government be? Whom are they to support in that situation? Will they try to persuade Prince Souvanna Phouma not to go back to Paris but to proceed with his mission?
Those are the questions which are decisive and the House is entitled to ask for those assurances from the Government before agreeing to an Adjournment Motion which carries us to the end of the month and beyond the period which may be the new crisis period.
The Leader of the House cannot tell us that he is not speaking as a Departmental Minister. He has at his elbow the comfort and advice of at least one member of the Foreign Office at Ministerial level, and he must appreciate that the mere statement that we are dealing with a formal Adjournment Motion could not satisfy the House. It is clear that the assurance would be a political assurance and would be binding on the whole Government. My attitude to the Motion depends entirely upon his preparedness to give the assurance which I have demanded.

4.15 p.m.

Mr. Anthony Fell: As a loyal supporter of Her Majesty's Government, whenever such a course is possible, I naturally want to support my right hon. Friend's Motion, but I wonder whether, before committing myself finally to supporting him, he would give

me some information. I am a little concerned, as are other hon. Members, about the Common Market negotiations. Although we are having a two-day debate on the Common Market, tomorrow and the next day, it is recognised that negotiations are going on all the time and that much mare information will progressively become available over the next month or two.
I seek the assurance that the fifteen-day Recess will not be used in any way as an argument by the Leader of the House for showing that there is no time for at least a two-day debate if decisions are announced, as has been commonly rumoured in the newspapers, some time at the end of July, so that we shall have at least two days to discuss decisions announced then on the progress made by the Government with the Common Market countries; and, further, that after the Commonwealth Prime Ministers' Conference in September we shall have another debate fairly soon after the House returns from the Summer Recess before anything further is done by the Government. If I could have those two assurances, I should be delighted to support the Motion.

4.17 p.m.

Mr. Sydney Silverman (Nelson and Cabe): In spite of the rhetorical jibes and sneers of the hon. Member for Peterborough (Sir Harmar Nicholls), perhaps I should say because of them, 1 still think that my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) is right in his opposition to the Motion. I know that this kind of Motion has become a sort of common form over the years, and it is right that it should be so even when the opposition is not seriously intended and when it is being used only in order to call attention to odds and ends and untidy remnants of what we have been debating over the weeks. But this is not that kind of opposition.
I do not want to be pretentious or pontifical about it, but it is my view, and I am sure the view of others, that the world is now at an extremely critical point, an exceptionally important and dangerous point. It would be difficult to think of any other time in history when so many fundamental questions, whose right decision has the greatest possible importance not only for this


country but for the world, have fallen to be considered at the same time.
I do not want to list them, because I do not want to occupy more time than is necessary to my purpose in opposing the Motion, but it seems to me that in that situation the House would be well advised to take the minimum interregnum rather than the maximum interregnum even if the Government were treating the House fairly on these questions. The Government are not and have not been treating the House fairly in these matters. Nor is there any indication that they propose to do so.
There have been many occasions when Members opposing the Motion for the Adjournment have said that matters have been ruled out because there has not been time. If the House of Commons has been denied the opportunity of concluding its debates and reaching decisions about them in several important recent cases, it has not been because there has not been time. It has been because the Government, with the connivance or active co-operation of the Opposition, have decided to deprive the House of its opportunities. I will cite two recent instances well within memory.

Mr. Speaker: Order. That is exactly the same point as that on which I have been ruling. I understand that the fact that there has not been a debate on a specific topic may be very relevant to the argument on this Motion, but the reasons why there has not been a debate do not seem to be relevant to it.

Mr. Silverman: I am not quite sure that I follow that. The point which I am trying to make is that the Government have used their power so to manipulate the business and procedure of the House as to prevent a decision from being taken by the House on matters on which the House would have desired to take a decision. It is not for a Government which have done that on at least two occasions, and perhaps others, now to come to the House and to say, "Assist us in depriving the House of the opportunity of debating or voting upon other matters by adjourning at this time for longer than is necessary or longer than is right."
I have two instances in mind. I will not debate the merits of them, but I want to recall what happened. Some-

thing was said about Supply days, which are at the disposal of the official Opposition. On the last occasion when foreign affairs were to be discussed this very question of Thailand and Laos was prominent. On that occasion a Motion was overwhelmingly passed to report Progress and to ask leave to sit again before we had even began to discuss business —not merely when there had been no progress but when no progress could have been recorded, because before any speech on the Supply day had been made, the Motion to report Progress was moved. I am not saying that there was anything improper about that. The procedure is there, and technically it was properly used, but only technically, because the purpose of it was obviously to prevent a decision on a Supply day when a vote had been refused only with the greatest difficulty.
When we passed from that to the Adjournment, when in more difficult and more ambiguous circumstances a vote is still possible, the final spokesman for the Government went beyond 10 p.m. and talked his own Motion out for the express purpose of not allowing a vote to be taken on that occasion either.
The right hon. Gentleman poked a little fun at my hon. Friends and myself; he said that we should have been more watchful and more alive and should have sought to move the Closure. But that is not the point. It ought not to be left to a backbench Member to watch carefully in order to see whether the Government intend to talk out their own business and whether it is only a question of debate. Debates in the House can sometimes be useful without a vote where one wants a general, exploratory discussion. It has often been done with great advantage to the Government; when they have not yet made up their mind about some proposals or some Bill, it has been useful to have a general debate in the House to see what was the general balance of opinion and to see what they could do at the appropriate time to bring in their proposals.
This was not that kind of debate. The Leader of the House said expressly, "I do not have to have a conclusion to this debate. A vote is unnecessary because in my opinion if there were a vote there would be an overwhelming majority of the House on my side." No doubt he was entitled to hold that view, having


regard to the express support of the official Opposition and their spokesman on the Front Bench, but I hope that it is not going too far for me to appeal to the right hon. Gentleman in these matters to forget for the moment that he is Chairman of the Conservative Party—

Mr. Speaker: Certainly it is irrelevant to this Motion whether he is Chairman of the Conservative Party or not Chairman of it. With respect to the hon. Gentleman, I think that his point in connection with this Motion is made by saying that for one reason or another we have not had a Division on this point and therefore he does not agree to the Motion.

Mr. Silverman: I am saying, Mr. Speaker, and I hope that on consideration you will think it not improper for me to say it, that as a private Member of the House of Commons I can claim that the Leader of the House owes an obligation to me as well as to the Leader of the Opposition—

Mr. Speaker: Order. I hope that the hon. Member will not misunderstand me. He knows as much about these matters as almost anybody here, but he knows that my duty is to keep what is said relevant to the Question which we are discussing, and it seemed to me that he had gone beyond the bounds of relevancy at that point.

Mr. Silverman: If I have done so, I will not pursue it for a moment, but it happens to be a fact that the right hon. Gentleman holds other offices than that of Leader of the House. All I seek to do is to remind them that he is Leader of the House and that in that capacity, at any rate, his obligations are as much to private Members as they are to anyone else, and I am appealing to him in that capacity.
I know that leading the House of Commons, unlike bridge, is not an easy game. The conventions are not quite as well understood and the penalties for breaking them are not as obvious, but surely if we are in a situation which I described as so serious at the beginning of my speech, it is not wrong to ask the right hon. Gentleman to bear in mind that, if every other Member of the House of Commons were prepared to support the Government in sending troops out of this country into a foreign country

without the consent or authorisation of Parliament, it would still be wrong to deprive any hon. Member who did not support the Government of the opportunity to say so and to record his dissent according to the honoured traditions and practices of the House.
We shall be coming to the end of the Session altogether at the end of July. There will then be weeks and weeks and weeks when the Government will be inaccessible to question or argument or to effective representation of any kind. But all these questions will go on in the meantime. Laos will go on, Thailand will go on, the Common Market will go on, and all the other fundamental issues will not stagnate just because the House of Commons has gone on holiday. By the time we come back all sorts of irrevocable decisions may have been taken. We may have become involved and immersed in many parts of the world in circumstances in which even those who now so enthusiastically support the Government will begin to have their doubts. In the recent debate, my right hon. Friend the Member for Easington (Mr. Shinwell) and my right hon. and learned Friend the Member for Rowley Regis and Tipton (Mr. A. Henderson) described the foreign affairs debate as the worst in their long Parliamentary experience. That may or may not be so, but do not let us produce a situation in which it could fairly be said that this House of Commons is the most subservient House of Commons in that time—

Mr. E. Shinwell: It is.

Mr. Silverman: If it is not, it is rapidly becoming so.
All these questions are being asked, fraught with terror as they are, and my right hon. Friends are either content with no debate or content to support the Government in preventing the House of Commons from coming to a decision upon them. The Government want to see what the United States do and the Opposition Front Bench wait to see what the Government are doing; and then they all do it together and try to shout down those of us who want the House of Commons to take a more serious and responsible view of its functions. There are people who think that our way of life is so important and so much better than that of anyone else that we are entitled to sentence hundreds of millions of


people to death to preserve it. If we are entitled to do that, cannot we at least sacrifice three or four days of our Whit-sun holiday in order to be faithful to it?

4.30 p.m.

Mr. Arthur Lewis: I want to raise what may appear to be a rather small matter, but I think that it is important, and it is the reason why I believe that the House should not accept the Motion to adjourn for the Whitsun Recess. On the surface this may appear to be small and trivial, but after the House has heard me I believe that hon. Members will regard it as important.
I was asked to raise an important subject concerning the difficulties experienced by persons in rural areas in getting proper medical treatment under the National Health Service. They could not get their prescriptions dispensed or surgery facilities or a whole host of day-to-day necessities which are laid down in the National Health Service Act. I wrote to the Minister of Health and sent him a circular and a cutting from the Press.

Mr. Deputy-Speaker (Sir William Anstruther-Gray): Order. The hon. Member is going too far. We are discussing the Question,
That this House at its rising on Friday do adjourn till Tuesday 26th June.
It is in order for the hon. Member to suggest that because a certain matter requires discussion the House should not adjourn, but he is out of order to discuss the details of the matter which he would like to raise.

Mr. Lewis: That is why I did not discuss the details, give the name of the person or the area or state the complaint. I generalised. I was going on to explain why I felt that the House should not adjourn and to explain why the Leader of the House should have an investigation made into this matter which I shall mention. This is why I think that the House should not adjourn. The reason is that if the House adjourns for three weeks I shall have no opportunity to raise this issue, and therefore I oppose the Motion to enable me to raise it.

Mr. Deputy-Speaker: Order. I regret having to interrupt the hon. Member again, but this is exactly what he cannot do—give the details of this matter.

Mr. Lewis: I am not giving the details but the general question of why I think the House should not adjourn for the period stated in the Motion. Other hon. Members have mentioned nuclear tests, the Common Market and various matters which they feel should be discussed. I wish to mention a subject which ought to be debated, and I feel that the House should not adjourn until this subject which I shall mention has been discussed.
I asked a Question last Tuesday of the Minister of Health—whether he had received a letter from me on this subject. I received a rather flippant reply in which he thanked me for sending him an extract from the East Anglian Daily Times of 17th April. But the Minister has never written to me, although he says that he has. I followed him last week and told him that he had not written, although he had told the House so, and even though I telephoned again this morning I still have not had the reply which he said had been sent.
My purpose in opposing the Motion is that if the House did not adjourn I could either raise the matter on the Adjournment or ask a Question. I cannot say that the Minister has told a deliberate lie because that would be out of order, but he is certainly guilty of a terminological inexactitude when he states that he has written to me as far back as last week.

Mr. Deputy-Speaker: Order. The hon. Member is going into details of his case. All that he is entitled to do on this Motion is to argue that he has a case that he would like to put and, therefore, he would prefer the House not to adjourn for the Recess. He is not entitled to go into the details of his case, but that is what he is now doing.

Mr. Lewis: Then, Mr. Deputy-Speaker, may I, without mentioning the case at all, ask the Leader of the House to see to it that when Ministers give replies, they are truthful replies—[HoN. MEMBERS: "Oh."]—and that when the Minister—

Mr. Deputy-Speaker: Order. I hope that the hon. Member will not continue along that line. That would be quite out of order and quite wrong.

Mr. Lewis: Then I withdraw that, Mr. Deputy-Speaker. I ask the Leader


of the House to ensure that when Ministers make statements in the House in answer to Questions stating that they have written to hon. Members dealing with their complaints, they have in fact done so and that they do not say that they have written when they have not done so. Will he also ensure that when hon. Members telephone Ministries and speak to the Minister or his officers and they promise to look at a matter urgently, there is not a delay of a whole `week before the matter is dealt with, because that is very serious?
As we are discussing the Motion that the House should adjourn for three weeks and as even when Parliament is sitting Ministers promise hon. Members to deal with certain matters and then treat both the hon. Members and the House with contempt, I think I am entitled to oppose the Adjournment and to say that this is a most serious matter. If we cannot get Ministers to do their job properly and carry out their promises even when Parliament is sitting, how are we to deal with this issue? This is not the first time it has happened. Other hon. Members besides myself have experienced this.
I want the Leader of the House to put this matter to the Minister of Health and various other Ministers and to ensure that when Ministers give answers in the House making pledges and saying that they have written to hon. Members, they have seen to it that such letters have been sent. Otherwise I shall most certainly oppose the Motion.

4.40 p.m.

Mr. Emrys Hughes: I support the arguments of my hon. Friend the Member for Ebbw Vale (Mr. M. Foot). He has asked that the House should return to work a week earlier so that we can discuss the nuclear tests and the situation which has resulted in our sending troops to Thailand. That will take up two days of the week. I suggest that the rest of the week could very profitably be used in discussing the affairs of Scotland.
I fail to see any really serious argument for having the extra week so that we can carry on an intensive campaign among our constituents. I live among my constituents and know them, and after the first week following Whitsun

they will say "Is it not time you started work again?" The same thing will be said throughout Scotland. I wonder what would be said in this House if the miners in Scotland went on an unofficial strike for a fortnight to celebrate Whit-sun. A lot of people in Scotland do not know why we should celebrate Whitsun.
If what my hon. Friend has suggested were accepted there would be an enthusiastic response in Scotland, where people would say "At last, the talking shop has decided to do a little extra work." I am sure that this would have the support of the miners in my constituency. If any body of people in Scotland requires two weeks' holiday with pay, it is the miners of South Ayrshire. The miners throughout Scotland are very alarmed at present about the threat of pit closures and are all the time asking "Is the British House of Commons devoting any time to discussing the economic problems affecting miners and other industrial workers all over the west of Scotland?" They read in the newspapers that the Scottish Grand Committee is devoting its time and energies to discussing in great detail a Bill dealing with licensing in Scotland. I understand that it is greatly desired that that Bill should be rushed through so that in July we may begin to discuss other subjects which are of far greater importance to the people of Scotland than facilities to enable the drink vested interests to exploit the increased opportunities for satisfying thirst which will come when the Bill finally makes its way to the Statute Book.

Sir Harmar Nicholls: While I oppose much that is said by hon. Members opposite, I should have no objection to the Scottish Grand Committee sitting throughout the Whitsun Recess.

Mr. Hughes: If the hon. Member normally took as much interest in the Scottish Grand Committee as he apparently does at the moment, we should see him oftener. We have not seen him very often during the last three months, and we have not seen him during the last three weeks. I carried out a casual examination of the Division lists for the last fortnight, and I cannot see that he has been doing a great deal. He should welcome the opportunity of coming back for an extra


week to show his constituents that he really is a Member of the House.
I suggest that Scottish hon. Members would be pleased to come back here after the first week in order to deal with the problem of how to find work for all our unemployed, how to deal with the ever-growing housing problem and how to deal with the economic problems which are thrusting themselves upon us. It may be, of course, that in Peterborough there are very large crowds of people queueing to attend the hon. Member's meetings.

Mr. S. Silverman: Do not believe it.

Mr. Hughes: I am giving the hon. Member the benefit of the doubt. Apart from the by-elections, at this time of the year there is very little political activity in this country. As a matter of fact, the Leader of the House knows very well—he knows as well as anybody—that it is very difficult to get audiences at this time to listen even to Cabinet Ministers, let alone ordinary Members of Parliament. Most Members of Parliament during this holiday take the advice of Voltaire, which was "Cultivate your garden". It is ridiculous to suggest that we need this extra week to find out what our constituents are thinking, whether they are interested in whether the hon. Member for Peterborough (Sir Harmar Nicholls) is in the House of Commons or not. That is completely fantastic, and if we think that, we are deluding ourselves. We are having this extra week purely because we have an opportunity to indulge in two weeks' unofficial strike without anybody taking much notice of it.
What about the two issues raised by my hon. Friend the Member for Ebbw Vale? When we press the Leader of the House on whether we ought not to have a vote about the tests, he says, "We have the general opinion of the House". When we press the Prime Minister at Question Time, he also says, "Yes, I am confident that I have the feeling of the House". But one can only get the feeling of the House by having a vote. I suggest that one day of the extra week should be given to a vote about the tests. A Motion should be put down by the Government in support of their policy. Why not?

Surely the House of Commons is not just a debating society. This is an assembly where matters have to be decided. With the tacit agreement of the Opposition Front Bench, the Government have gat into the habit of assuming that they have the overwhelming support of the country for their tests policy, for their Polaris policy, and for their Thailand policy.
The Leader of the House tells us to put down a Motion. We have put down a Motion. We have done it three times. But we cannot get it discussed. If at one of the crowded meetings that we are supposed to be going to address during the next fortnight someone says, "As a constituent of yours, I want to know how you voted on the question of the tests", what are we to say? We must reply, "We have not had a vote". The people will then say, "Why do you go to Parliament? Does the House of Commons decide things, or are things decided by a nice cosy little talk or a tacit agreement between people playing political ping-pong across the Table of the House of Commons?".
If the Prime Minister wants to go to President Kennedy or to President de Gaulle and say, "I have the support of the House of Commons", and they say, "What was the vote on the last occasion?", he will have to reply, "We have not had a vote". I suggest to the Leader of the House that he could usefully allocate one day to the setting down of a Motion stating that this House approves the policy of Her Majesty's Government in agreeing to the tests in the Pacific, so that he might see what happens.

Mr. S. Silverman: They would talk it out.

Mr. Hughes: The Leader of the House may feel sure that he has support, but does he think he would get an overwhelming number of the hon. Members on the other side of the House going into the Tory Lobby to support such a Motion? Of course not. The result would be that large numbers of hon. Members would abstain.

Mr. Silverman: Or vote against the Government.

Mr. Hughes: This is what the House of Commons has come to. While the people in the constituencies think that


hon. Members are fighting tooth and nail and battling to death in the House of Commons over serious issues, what is really happening? There is a tacit agreement to avoid the House of Commons having to give its verdict and opinion on the most momentous issues of the day. Sooner or later the people will ask: "Why are you not voting on these issues?", "Why did you not vote?" or "Why did you abstain?" Surely this is what democracy is about. Therefore, I suggest that if the Leader of the House wants truthfully to say to President Kennedy or President de Gaulle" The overwhelming majority of the people of Britain are behind the Government's policy ", he should test it out by means of a vote.
There is also the question of Thailand. I put a Question to the Prime Minister asking him if he was aware that in Thailand there was a corrupt despotism, a corrupt dictatorship and an illiterate population, and that we are sending troops there to buttress and support a feudal monarchy or despotism. The Prime Minister replied "I have stated the position to the House of Commons, and the House of Commons supports me." How does he know? Does he think that the great majority of hon. Members on the Opposition side of the House will be prepared to go to their constituents and say "Yes, I voted for sending troops to Thailand to support a corrupt Government"?
I suggest, therefore, that the Leader of the House should try to inculcate a little political honesty into the proceedings of the House. He will not do this by dodging, evading and sabotaging real discussion. The only way for him to do it is to say, as any Government should, "This is our policy and we are asking the House of Commons to support it." Until he adopts that attitude we shall perpetually make the sort of claims my hon. Friends have been making today.
There is absolutely nothing in the idea that hon. Members are so exhausted after their labours on the Finance Bill that they need an extra fortnight in which to recuperate and to discover the real feelings of their constituents. After all, they have plenty of time in which to do that; twelve weeks in the summer,

three weeks in December, another fortnight at Easter and any amount of opportunity to find out just what the feelings of their constituents are. There is real political meaning in the protest my hon. Friends and I are making. This protest will triumph because our words will echo a response in the minds of the people.

5.2 p.m.

The Chancellor of the Duchy of Lancaster (Mr. lain Macleod): If I may start with the last speech, might I say that I always enjoy the remarks of the hon. Member for South Ayrshire (Mr. Emrys Hughes) when he talks about the miners of Ayrshire and unofficial strikes. In fact, we normally hear those remarks three times a year—whenever we move to adjourn. The hon. Member for South Ayrshire made an admirable quotation and perhaps he will remember this slight variation of another:
Age does not wither him nor custom stale, His infinite lack of variety".
The Motion before the House states:
That this House, at its rising on Friday do adjourn till Tuesday, 26th June.
Let me first take the question of the normal period for which the House adjourns. I have the records covering the last fourteen years with me. One year the House adjourned for a month because of the dissolution of Parliament, and on the remaining thirteen occasions we adjourned for seventeen days on ten of them—the period we are now suggesting—and on three occasions, when presumably the business on the Floor of the House was unduly congested, the House adjourned for ten days. So the precedents as such are clearly in support of the Motion.
The main Question that has been put and supported by a number of hon. Members is whether the skies, particularly in foreign affairs, are so dark at the present time that it would be best to have a shorter adjournment and to spend more of our time discussing either these matters or some other matters which, presumably, other hon. Members might wish to put in competition with them. I will first take the point made by the hon. Member for Penistone (Mr. Mendelson), who referred to the specific case of Laos. If I might, first, I will take the general point and then deal specifically with Laos. Regarding the


general point, the House will realise that Standing Order No. 112, subparagraph (1), states:
Whenever the House stands adjourned and it is represented to Mr. Speaker by Her Majesty's Ministers that the public interest requires that the House should meet at any earlier time during the adjournment, Mr. Speaker, if he is satisfied that the public interest does so require, may give notice that he is so satisfied, and thereupon the House shall meet at the time stated in such notice.
I make this point because it has happened on occasions, when the sort of situation the hon. Member mentioned has arisen, that the House has come back.

Mr. S. Silverman: Does the Leader of the House really expect the House of Commons, which has witnessed the Government's efforts to avoid any discussion, debate or vote about Thailand and Laos, to have any confidence that if the situation develops he or his colleagues would exercise those powers under the Standing Order?

Mr. Macleod: The hon. Member for Nelson and Colne (Mr. S. Silverman) must, of course, make his own judgment on this, but I hope that, after the House has listened to me, it will be satisfied on this particular point.
The hon. Member for Ebbw Vale (Mr. M. Foot), who opposed the Motion, rested his case mainly on foreign affairs. It is true that this has become, as has been said, a time-honoured method of either raising a foreign affairs debate or, sometimes, Home Office subjects and matters affecting individual liberty if any such matters are particularly concerning the House. The first point the hon. Member for Ebbw Vale made was in relation to the series of H-bomb tests, and he said more than once in his speech that the present series of American tests was, perhaps, the largest ever undertaken.
Actually this series began in the Pacific on 25th April, and to date there have been some 15 tests. I would remind the hon. Member, however—and I expect that this slipped his memory or he would not have used the words he did—that President Kennedy said in a statement on 2nd March that the United States would be conducting far fewer tests than the Soviet Union with

far less fall-out. Thus I think that that point made by the hon. Member was not a sound one.
Regarding the question of high altitude tests, we are here, as was clearly indicated from the Chair, beginning to touch the edge of order and, for that matter, so is the point about Ministerial responsibility, because these tests, of course, are taking place from Johnson Island, which is under United States sovereignty.
Regarding the question of disarmament, this has been made clear. Perhaps the best words I can use are those contained in the joint letter of the Prime Minister of this country, the President of the United States and Mr. Khrushchev of 7th February, which stated:
Our representatives will remain at the conference table until more results are achieved, however long that will take".
There need be no doubt about the determination of Her Majesty's Government in this field.
The hon. Member for Nelson and Colne raised, as did the hon. Member for Ebbw Vale, the question of troops in Thailand, and asked for a debate on the subject and also a vote. The hon. Member for Nelson and Colne has raised the matter today and on previous occasions. The position, as I see it, is this; there is, with respect to the hon. Member for Ebbw Vale, a clear distinction in these matters, which he will find in Erskine May, between the position of the Leader of the Opposition and that of other hon. Members who may be critical of the Government or who even may have Motions of censure on the Order Paper.
It is a known and accepted custom of the House that, although the Government are entitled to take into account their own programme regarding the actual provision of a day, formal Motions of disapproval in the name of the Leader of the official Opposition—and my predecessors have made it clear that this does not extend to leaders of either smaller parties or groups of hon. Members in the House—are normally taken, for obvious reasons, as soon as possible.
It is true, as the hon. Member for Ebbw Vale said, that a considerable number of hon. Members—he said between 40 and 50—have supported a


Motion on the Order Paper which is in critical terms. But there are other Motions on the Order Paper which are supported by larger numbers of hon. Members than that, and we have not yet been able to find time to discuss those. He will realise that in this sort of matter there is, and always has been, the clearest possible distinction between disapproval voiced officially from the Opposition Front Bench and disapproval voiced, from either side, by those who do not hold that particular position.
I was asked one specific point by the hon. Member for Penistone with which I would like to deal. This concerns the situation in Laos and the question of the recall of the House. It is hoped that Prince Souvanna Phouma will meet the leaders of the other Laotian factions in the next few days after seeing the King of Laos. It may well be that the prospect for an agreement is not particularly good. I would not attempt to deny that for a moment. We cannot see at present how matters will develop, but if the negotiations fail it is perfectly possible, as the hon. Member said, that the situation might deteriorate. If fighting breaks out there is the risk that foreign intervention could arise suddenly. One cannot say now, gazing into the crystal, whether a situation will arise which will make it necessary or desirable to recall Parliament from its Whitsun Recess, but I assure the hon. Member, and I think this will to some extent reassure the hon. Member for Nelson and Colne, that in such a situation, if the negotiations failed, if the situation deteriorated rapidly and fighting looked likely to break out again, certainly we would consider the operation of Standing Order 112, and would consider making representations accordingly.

Mr. S. Silverman: But would the right hon. Gentleman do it?

Mr. Macleod: I said that we would consider it, and make representations on behalf of the Government.
On the question of a vote on some of these matters, we had some jocular asides on Business Questions the other day, as the hon. Member for Nelson and Colne will remember, but, with respect, I do not think that he is on a sound point here. He was saying that there was no real opportunity for a vote, because the discussions took place

on the Motion for the Adjournment and the Government spokesman talked over the time. The House will remember that some of the greatest debates in the House have taken place on the Motion for the Adjournment, and some of the most important decisions have also been taken on the Motion for the Adjournment. Indeed, the last time a Prime Minister of this country fell in a debate in this House, just before the Chamber was destroyed by German bombs, was in an Adjournment debate. This shows that it is possible to have great Divisions of historic importance on the Motion for the Adjournment.
Although it is not for me to say what action the Chair should take, I think that one can reasonably say that if the Closure is applied for at the end of a full day's debate, it is almost invariably granted by the Chair. Therefore, great debates do take place on the Adjournment, and great Divisions have taken place, and a Division could have taken place on that issue.

Mr. S. Silverman: I have no doubt that the Leader of the House was perfectly right in what he was saying. I was myself a Member of the House of Commons on the occasion to which he referred, and the vote on the Adjournment which led to the fall of the Neville Chamberlain Government was one of the most important votes in the history of the House. But would the right hon. Gentleman consider what would have happened on that fateful day in June if the Government spokesman had talked out the debate?

Mr. Macleod: I know perfectly well what would have happened. Mr. Herbert Morrison, as he then was, would have leapt to his feet a few minutes before the end and would have moved the Closure. Nobody could have the-remotest doubt about that.
One or two other points were made. My hon. Friend the Member for Yarmouth (Mr. Fell) will, I hope, let me say what real and refreshing fruit his first sentence was, in which he gave complete support to the Government, but I cannot give him the undertaking—

Mr. Fell: My right hon. Friend must not—I am sure he does not want to—put words into my mouth. I did say "loyal support for the Government, whenever that is found to be possible."

Mr. Macleod: I know, but one step at a time will do, and that, at least, is something. I am afraid that I cannot give him the undertaking exactly in the terms which he asked for, but, as has been said on many occasions in relation to the Common Market, which we are to discuss in a two-day debate starting tomorrow, the position is that, quite apart from that debate, full opportunity will be given for consideration, discussion and debate by the House.
The hon. Member for West Ham, North (Mr. A. Lewis) raised a point with which I know he will not expect me to deal now. I will merely say that I will draw it to the attention of my right hon. Friend the Minister of Health, who will no doubt consider what was said and read it in HANSARD.

To sum up, the position is that 17 days, the period to which I am asking the House to agree, is in fact the normal time. The great majority of the precedents accord with it. Secondly, there is provision, and I have given an undertaking in response to a specific question in relation to the situation in Laos, for the recall of the House under Standing Order No. 112 if representations are made by Her Majesty's Ministers to Mr. Speaker, and if Mr. Speaker agrees with those representations. I think that if we keep those two points in mind, we should be well justified in taking the short rest that is suggested and returning on Tuesday, 26th June.

Question put:—

The House divided: Ayes 232, Noes 4.

Division No. 213.]
AYES
[5.5 p.m.


Agnew, Sir Peter
Courtney, Cdr. Anthony
Howard, John (Southampton, Test)


Aitken, W. T.
Critchley, Julian
Hughes Hallett, Vice-Admiral John


Allason, James
Crosthwaite-Eyre, Col. Sir Oliver
Hughes-Young, Michael


Arbuthnot, John
Cunningham, Knox
Hurd, Sir Anthony


Ashton, Sir Hubert
de Ferranti, Basil
Hutchison, Michael Clark


Barber, Anthony
Digby, Simon Wingfield
Iremonger, T. L.


Barlow, Sir John
Drayson, G. B.
Irvine, Bryant Godman (Rye)


Batsford, Brian
Duncan, Sir James
Jackson, John


Beamish, Col. Sir Tufton
Eden, John
James, David


Bennett, F. M. (Torquay)
Elliot, Capt. Walter (Carshalton)
Jennings, J. C.


Bennett, Dr. Reginald (Gos &amp; Fhm)
Farey-Jones, F. W.
Johnson, Dr. Donald (Carlisle)


Berkeley, Humphry
Farr, John
Johnson, Eric (Blackley)


Bevins, Rt. Hon. Reginald
Fell, Anthony
Johnson Smith, Geoffrey


Bldgood, John C.
Finlay, Graeme
Joseph, Sir Keith


Biffen, John
Fisher, Nigel
Kaberry, Sir Donald


Biggs-Davison, John
Fletcher-Cooke, Charles
Kershaw, Anthony


Birch, Rt. Hon. Nigel
Fraser, Ian (Plymouth, Sutton)
Kitson, Timothy


Bishop, F. P.
Freeth, Denzil
Langford-Holt, Sir John


Black, Sir Cyril
Galbraith, Hon. T. G. D.
Leather, E. H. C.


Bossom, Clive
Gammans, Lady
Leavey, J. A.


Bourne-Arton, A.
Gardner, Edward
Leburn, Gilmour


Box, Donald
Gibson-Watt, David
Legge-Bourke, Sir Harry


Boyd-Carpenter, Rt. Hon. John
Glover, Sir Douglas
Lewie, Kenneth (Rutland)


Boyle, Sir Edward
Glyn, Sir Richard (Dorset, N.)
Lindsay, Sir Martin


Bralne, Bernard
Goodhew, Victor
Linstead, Sir Hugh


Brewis, John
Gower, Raymond
Litchfield, Capt. John


Bromley- Davenport, Lt. -Col. Sir Walter
Grant, Rt. Hon. William
Lloyd, Rt. Hon. Selwyn (Wirral)


Brooke, Rt. Hon. Henry
Grant-Ferris, Wg. Cdr. R.
Longbottom, Charles


Brooman-White, R.
Green, Alan
Longden, Gilbert


Brown, Alan (Tottenham)
Gresham Cooke, R.
Loveys, Walter H.


Browne, Percy (Torrington)
Grosvenor, Lt.-Col. R. G.
Lucas-Tooth, Sir Hugh


Bullard, Denys
Gurden, Harold
McAdden, Stephen


Bullus, Wing Commander Eric
Hall, John (Wycombe)
MacArthur, Ian


Burden, F. A.
Hamilton Michael (Welingborough)
McLaren, Martin


Butcher, Sir Herbert
Harris, Reader (Heston)
Maclean, SirFitzroy (Bute&amp;N.Ayrs.)


Butler, Rt.Hn.R.A. (SaffronWalden)
Harrison, Brian (Maldon)
McLean, Neil (Inverness)


Campbell, Sir David (Belfast, S.)
Harrison, Col. Sir Harwood (Eye)
Macleod, Rt. Hn. lain (Enfield, W.)


Campbell, Gordon (Moray &amp; Nairn)
Harvey, Sir Arthur Vere (Macclesf'd)
McMaster, Stanley R.


Cary, Sir Robert
Harvey, John (Walthamstow, E.)
Macpherson, Niall (Dumfries)


Channon, H. P. G.
Hastings, Stephen
Maddan, Martin


Chataway, Christopher
Heald, Rt. Hon. Sir Lionel
Manningham-Buller, Rt. Hn. Sir R.


Chichester,-Clark, R.
Henderson, John (Cathcart)
Markham, Major Sir Frank


Clark, William (Nottingham, S.)
Hicks Beach, Maj. W.
Marlowe, Anthony


Cleaver, Leonard
Hiley, Joseph
Marshall, Douglas


Cole, Norman
Hill, Dr. Rt. Hon. Charles (Luton)
Marten, Neil


Collard, Richard
Hinchingbrooke, Viscount
Matthews, Gordon (Merlden)


Cooke, Robert
Hobson, Sir John
Mawby, Ray


Cooper, A. E.
Holland, Philip
Maxwell-Hyslop, R. J.


Cooper-Key, Sir Neill
Hollingworth, John
Maydon, Lt.-Cmdr. S. L. C.


Cordeaux, Lt.-Col. J. K.
Hope, Rt. Hon. Lord John
Mills, Stratton


Cordie, John
Hopkins, Alan
More, Jasper (Ludlow)


Corfield, F. V.
Hornby, R. P.
Morgan, William


Costain, A. P.
Howard, Hon. G. R. (St. Ives)
Mott-Radclyffe, Sir Charles




Nicholls, Sir Harmar
Roots, William
Turner, Colin


Nicholson, Sir Godfrey
Ropner, Col. Sir Leonard
Turton, Rt. Hon. R. H.


Nugent, Rt. Hon. Sir Richard
Seymour, Leslie
van Straubenzee, W. R.


Oakshott, Sir Hendrie
Sharples, Richard
Vaughan-Morgan, Rt. Hon. Sir John


Orr, Capt. L. P. S.
Shaw, M.
Vickers, Miss Joan


Osborne, John (Hallam)
Skeet, T. H. H.
Vosper, Rt. Hon. Dennis


Osborne, Sir Cyril (Louth)
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Walder, David


Page, Graham (Crosby)
Smithers, Peter
Walker, Peter


Page, John (Harrow, West)
Smyth, Brig. Sir John (Norwood)
Walker-Smith, Rt. Hon. Sir Derek


Pannell, Norman (Kirkdale)
Spearman, Sir Alexander
Ward, Dame Irene


Partridge, E.
Stevens, Geoffrey
Watkinson, Rt. Hon. Harold


Pearson, Frank (Clltheroe)
Steward, Harold (Stockport, S.)
Wells, John (Maidstone)


Pickthorn, Sir Kenneth
Stoddart-Scott, Col. Sir Malcolm
Williams, Dudley (Exeter)


Pike, Miss Mervyn
Studholme, Sir Henry
Williams, Paul (Sunderland, S.)


Pitt, Miss Edith
Summers, Sir Spencer
Wills, Sir Gerald (Bridgwater)


Pott, Percivall
Talbot, John E.
Wilson, Geoffrey (Truro)


Profumo, Rt. Hon. John
Taylor, Sir Charles (Eastbourne)
Wise, A. R.


Proudfoot, Wilfred
Taylor, Edwin (Bolton, E.)
Wood, Rt. Hon. Richard


Quennell, Miss J. M.
Taylor, Frank (M'ch'st'r, Moss Side)
Woodnutt, Mark


Ramsden, James
Teeling, Sir William
Worsley, Marcus


Redmayne, Rt. Hon. Martin
Temple, John M.
Yates, William (The Wrekin)


Rees, Hugh
Thatcher, Mrs. Margaret



Renton, David
Thomas, Leslie (Canterbury)
TELLERS FOR THE AYES:


Ridsdale, Julian
Thomas, Peter (Conway)
Mr. Whitelaw and Mr. Noble.


Roberts, Sir Peter (Heeley)
Tilney, John (Wavertree)
Mr.Noble.


Robinson, Rt. Hn. sir R. (B'pool, S.)
Touche, Rt. Hon. Sir Gordon





NOES


Baxter, William (Stirlingshire, W.)
TELLERS FOR THE NOES:


Bowles, Frank
Mr. M. Foot and Mr. Emrys Hughes.


McKay, John (Wallsend)
Mr.Emrys Huges.


Silverman, Sydney (Nelson)

LOCAL EMPLOYMENT (OFFICE BUILDINGS)

5.15 p.m.

Mr. E. G. Willis: I beg to move,
That leave be given to bring in a Bill to amend the Local Government Employment Act, 1960, for the purpose of including office buildings.
The Bill would amend Part II of the Act in a manner which would bring office development within the industrial certificate procedures. A similar proposal was rejected at the time when the 1960 Measure was going through the House, but in the light of what has continued to happen since then, I believe that the House would look upon this proposal with more favour now.
When we look at what has been happening since then we find that, in spite of all the efforts made by the Government, employment continues to rise in those areas from which we seek to direct it rather more rapidly than it does in the areas to which we are trying to direct it. During the last five years for which I have been able to obtain figures—1956–61—the total number of insured workers in the Midland Region has risen by 88,000 in the London and South-Eastern Region by 240,000 and in the Greater London Region alone by

155,000. During that period the number of insured workers in Scotland has fallen by 9,000.
That is not the whole picture, because if we take the whole working population of Scotland we find that there has been a fall of 38,000 and, what is possibly more serious, a fall of 58,000 in the male working population, during those five years. It is against this background that we have to view the much-vaunted pipeline of the Secretary of State for Scotland. Against this background it is seen for what it is, namely, a very leaky and most inadequate drip-feed.
At present, 488 persons out of every 1,000 of the resident population of London are in insured employment. In Scotland, the number is only 413. If we look for some of the reasons why London enjoys these great advantages, it becomes obvious that they are in no small measure due to the enormous increase in office employment. The Town and Country Planning Association, in its excellent report The Paper Metropolis, tells us that in London's central area the number of jobs has grown by at least 15,000 a year in the last decade, and this increase was almost entirely in office employment. Later it tells us that the total employment in the County of London, including the central area, could increase by 200,000 in the next


ten years, and that practically the whole of this would be in office employment. This would be at double the rate at which we have been providing jobs in Scotland in the past five years, in every form of employment.
It is difficult to ascertain from the figures published by the Ministry of Labour just how rapidly this form of employment grows, but it seems clear that office employment is growing more rapidly than employment in any other sector of the economy. Because this growth is taking place mainly in areas of overfull employment, I feel that the time has come when we can no longer leave the allocation of office building to the present system of planning controls and inducements.
If we are to distribute employment throughout the country effectively, we require a much better instrument for dealing with office building, which in my Bill would be the development certificate. Trends in office development are already towards this form of control. The grouping together, by various financial and business techniques, of firms, bath large and small, all over the country, is leading to the increasing centralisation of the administration of these firms in mammoth blocks of offices increasingly equipped with the office machinery which can only be installed and operated efficiently if it is worked to near-capacity. That means loss of jobs in Scotland and elsewhere throughout the country and the draining of those jobs to London.
Increasingly, the modern centralised administrative office is becoming more like a factory, with this difference, that its employment capacity is very much greater. A given area of office floor space employs seven or eight times the number that the same floor space in a factory employs.
While it may be true that the presence in London of a small number of higher executives of an organisation makes for the efficiency of the country's economic life, there is no reason why the large administrative office, with its scores or hundreds or thousands of employees, cannot be placed away from London altogether, either say in Scotland, the North-East or anywhere else where employment is urgently needed.
I am fortified in this view by Ministers. The Chief Secretary to the Treasury, on 17th November, 1960, in a letter to business firms, when he was Minister of Housing and Local Government, seemed to agree with this, for he said, with his accustomed restraint, of course:
It may be important to have key staffs in London; but a good many firms and organisations have a great deal of office work which could be done at least as efficiently and much more cheaply elsewhere.
The President of the Board of Trade, when he was Economic Secretary to the Treasury, was rather more blunt and forthcoming. In a Scottish debate in July, 1959, he said:
While it is proper that we should concentrate on the provision of additional manufacturing industry, it is important to remember the increased amount of employment which is provided nowadays by service industries and offices. By using the telephone and other modern methods of transmitting information over long distances there is no reason why more office work … should not be done in Scotland rather than in the congested areas of London and the Midlands.—[OFFICIAL REPORT, 2nd July, 1959; Vol. 608, c. 635.]
Judging from what we see going on around us, it does not appear that the Ministers' appeals had very much effect, and I think that most of us know why. Last week, the golden boys of this vast and growing paper empire, namely, the Association of Land and Property Owners and the Associated Owners of City Properties, sent us all literature to say that they wanted no further controls on office buildings. They are enjoying a very big bonanza, and we can appreciate why they should send this literature to us. But at the same time as we were receiving this literature, another place was showing its concern over office building in London by defeating the Government on the question of the use of railway termini.
The Town and Country Planning Association, in the report to which I have referred, examined this problem in some detail. In considering the development certificate procedure, it said:
The situation is serious enough to warrant the use of such a control if it could be applied efficiently and fairly.
But it does not believe that this could be done easily. It says that it would be harder to apply to offices than to factories. Instead, it suggests control by a mixture of planning improvements and financial measures. But it is mainly concerned with spreading office building


from Central London to other areas, irrespective of whether they are areas of a high level of employment.
We are bound to concern ourselves much more with the over-riding consideration of spreading employment. When we do this, as far as I can judge, the proposals of the Town and Country Planning Association, which include such highly controversial matters as special levies and taxes, special differential payroll taxes and special differential rate surcharges, appear to be as difficult of application as, if not more difficult than, the development certificate procedure. Certainly they lack the essential flexibility which must characterise proposals for spreading employment to Scotland and other areas requiring special assistance and which is a feature of the development certificate procedure.
Of course, office employment is more difficult to spread than factory employment, but I am confident that it can be done if the Government display the will to do it. In spite of what has been happening in the last few years, a very large office-building programme still lies ahead of us. Many thousands of workers have still to be provided with modern, healthy and congenial working conditions. At the same time, as I have indicated, commercial development is leading to a steady expansion of office employment.
For all these reasons, and for many others which could be given, I believe the time is ripe for office development to assume its rightful place in our employment policies. Scotland and other development areas need office employment just as much as, and in fact far more than, London. I trust that the House will give me leave to introduce the Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. Willis, Mr. Ross, Mr. William Hamilton, Mr. Lawson, Mr. Small, and Mr. Milian.

LOCAL EMPLOYMENT (OFFICE BUILDING)

Bill to amend the Local Employment Act, 1960, for the purpose of including office buildings, presented accordingly and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 120.]

FINANCE BILL

Considered in Committee [Progress 30th May.]

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

New Clause.—(INCREASE OF INVESTMENT ALLOWANCES FOR EXPENDITURE IN DEVELOPMENT DISTRICTS.)

(1) In relation to expenditure incurred on or after the first day of August, nineteen hundred and sixty-two; in

(a) any industrial building or structure in a development district; or
(b) any machinery or plant which the claimant proves to be in use, or to be intended for use, in a development district;

subsections (2) to (5) of section sixteen of the Finance Act, 1954 (which provide for making investment allowances in respect of capital expenditure on certain new assets), shall have effect with the substitution for references to one-fifth and one-tenth (being the proportions of expenditure governing investment allowances) of references respectively to three-tenths and three-twentieths:

Provided that if such machinery or plant as aforesaid is not installed in or is removed from a development district (otherwise than into another development district for continuous use there) the claimant shall pay such amount of tax attributable to the machinery or plant as he has not paid, but would have paid if this paragraph had not been enacted:

So, however, that the last-mentioned amount shall be reduced by one-fifth thereof far each complete year since the making of the investment allowance, during which the machinery or plant has been in use in a development district.

(2) In this section the phrase "development district" has the same meaning as in the Local Employment Act, 1960.—[Mr. Callaghan.]

Brought up, and read the First time.

5.28 p.m.

Mr. James Callaghan: I beg to move, That the Clause be read a Second time.

The Chairman: It will be convenient to discuss with this new Clause the new Clause—Increase of investment allowances for investment in industries of special national importance—and to have a vote on both new Clauses if so desired.

Mr. Callaghan: I am moving this new Clause rather later than I had hoped. It is an important proposal and, if the hon. Member for Ebbw Vale (Mr. M. Foot) wishes to make a speech on these


events, he will find it very much to his taste. If the hon. Member for South Ayrshire (Mr. Emrys Hughes) wants to make a speedy on Scotland, I suggest that the hon. Member for Ebbw Vale should go and tell him of this discussion, because he does not have to wait until the Recess; he can do it this afternoon.

Mr. Michael Foot: I thank my hon. Friend for his courteous invitation. Usually, the Opposition Front Bench's objection is that we are here too often. I am most grateful for the invitation.

Mr. Callaghan: I am delighted to think that the hon. Gentleman thought that it was courteous. That is certainly more than can be said of some of the comments which he and some of his colleagues made during the last debate. Although I suppose it is his privilege to go on making slighting remarks about those of us who are trying to do our job fairly and well, he must not take it amiss if we feel slightly resentful of the tone which he adopts.
I move this new Clause because we regard increased investment allowances for expenditure in development districts as at least as important a matter as some of the other matters which have been raised this afternoon. Whatever cosmic view we may take of the universe, the fact remains that the day-to-day work of this country mist go on. Moving round the country, I find that it is in these fields that our constituents are betraying a great deal of interest.

15.30 p.m.

The simple proposal here is that in the development districts there should be an increase in investment allowances in respect of industrial buildings, machinery and plant in order to give a fiscal encouragement to industry situated there to develop there and to encourage new industries to go there. We believe that this is important for two reasons, firstly, to help the unemployment situation in those areas, and secondly, for the purpose suggested by my hon. Friend the Member for Edinburgh, East (Mr. Willis) in the Bill which he has just had permission to introduce, to get a better distribution and pattern of industry, and I would include office development, in the country.

I think it is true that up to the present most of our concern about the depressed areas and development districts has been because of the case for relieving unemployment. This is still important. It is of great importance in some areas, but there is also a growing case, of which the country is becoming more aware, for the need to ensure that industry and office development are equally spread throughout the country. Although this is in some ways a mutilated Clause, because we are unable to develop all the cases that we would like, this is one of the ways in which we should like to see this problem tackled.

My right hon. Friend the Member for Battersea, North (Mr. Jay) in his book Socialism and the New Society gave interesting figures showing what happened when there was a real policy for development areas, as they were then. He said that:
for twenty years between 1919 and 1939, Conservatives had argued that it was beyond the wit of man to find useful work for the 600,000 or 700,000 men and women chronically unemployed in these areas. Yet as early as 1951 some 300,000 new jobs had been directly provided by new publicly or privately financed factories together.… This was achieved by raising the proportion of new factory space going to the newly designated Development Areas (which originally included 15 per cent. of the population of Great Britain) to 45 per cent. of total new factory development in 1945–47, and 30 per cent. for the whole six years from 1945 to 1951.…

My right hon. Friend pointed out that
The London and S.-E. Region, which was getting nearly 50 per cent. of new factory building before 1939, had its proportion cut to only 12·3 per cent.
He went on to say that:
… Equally illuminating, however, were the effects of the relaxation of the policy after 1952, and its abandonment from 1957 to 1959.… The London and S.-E. Region, which had only 12·3 per cent. of total new factory space from 1945 to 1951, got as much as 18·4 per cent. of it from 1952 to 1958, and 20 per cent. in some parts of 1959. The areas needing employment, which had secured 30 per cent. in 1945 to 1951, got from 1953 to 1958 (though they had been enlarged and their share of national population raised from 15 per cent to 18 per cent.) only 18·6 per cent.
This was a direct consequence of lifting controls and allowing Conservative freedom to work. The result, without doubt, has been a lopsided development in our economy, with the growth of London until it has reached practically the point of strangulation in terms of traffic at certain times of the day. London is


becoming an impossible place to live in or to move in.

Although I do not claim that the fiscal measures proposed in this new Clause would wholly achieve the object, nevertheless we believe that the Government should take it as an example of a policy which is national in the sense that it would be good for the citizens of London and the South-East and for the areas in Wales, Scotland, Lancashire and Yorkshire where life is being drained away through industry crowding into the London region.

We know from the figures what is happening. The most dramatic figure I have seen is the simple one that during the last decade nearly one-half of the now jobs created in the country were within a radius of 40 miles from the centre of London. Therefore, what we suggest in the first new Clause is that here is one weapon which the Chancellor could use, which certainly would not be wholly effective, but at least would be another weapon in his armoury to enable the dispersal of industry to proceed on a broader basis and to be more evenly distributed throughout the country.

Unemployment, which is another reason for this proposal, varies between places like Oxford, where it is down to less than ½ per cent., to places like south-east Tyneside, where it is 5·5 per cent., The Hartlepools where it is 6·3 per cent., Greenock and Port Glasgow, 7 per cent., Ilfracombe over 8 per cent., Anglesey over 8 per cent., Milford Haven and Pembroke Dock 11·5 per cent., and of course Northern Ireland, which is notoriously bad in this respect.

These figures of unemployment are still a scandal to our community at a time when our resources are so heavily strained in so many fields of employment. It seems to me a blot on the Government's record that they should not have been able in 11 years of undisputed power to reduce unemployment in these areas down to the national level. On this ground alone I would submit a Clause of this sort for the consideration of the Committee in order that fiscal advantages should be given to industries which choose to set up in these areas.

Some may raise the question whether we ought to use fiscal methods of this

sort. Before the war they certainly would not have been considered, but I think that we have passed from the era when it was a belief in most industrial and commercial policy than taxation must bear equally on anyone wherever he was situated. In individual taxation we certainly adhere to that, but in company taxation there is no reason in principle or theory why we should not give fiscal incentives of this sort to clear up unemployment in these areas.

As for the rest, I would mention the simple fact, which is known to every hon. Member who represents a provincial constituency or a constituency in Wales or Scotland, that when constituencies in the Midlands and in the London area are bursting at the seams, this is the time when many of our large towns, with their proud histories and with considerable industrial skills gathered within their boundaries and a great record of civic and community interests, are stationary where they are not actually declining. It is surprising that at the moment when some parts of the country are absolutely bursting at the seams we have well-known towns and cities in the north of England in particular and in Wales and Scotland where the population is hardly moving because in many cases the younger life is being drawn off to the London area.

I am opposed to this and I am sure that if the present Government have not the will to tackle it another Government will have to do so, and it will have to be an active policy of which this new Clause would form one part. What success it would have is a matter of judgment but at least we should be able to say to any new industry, "Go to these areas and we shall be able to ensure that you do not suffer financially and indeed that there will be substantial tax advantages to you if you choose to go."

I do not think that there is very much more I need say about the first new Clause. I turn now to the second one—Increase of investment allowances for investment in industries of special national importance—which raises a slightly different point.

I think that it would be difficult to define these industries. I want to face that issue and discuss how it should be done. I imagine that there will be no


disagreement on either side of the Committee that the total level of capital investment in Britain today is much less than is desirable. I do not know whether this is disputed, but I hope that it is not. Reading the O.E.C.D. Report, it seems that, if there is one criticism which can be fairly levelled at this country, it is that not enough of our plant is 100 per cent. efficient, that too much is obsolete, and not enough is sufficiently up to date. Those were the strictures contained in the O.E.C.D. Report.

I should be out of order if I entered upon a discussion of the Government's incomes policy now, and I propose to say no more than this. The proposal that incomes should keep pace with production is an obvious platitude which has been uttered by, I think, every Chancellor of the Exchequer since the end of the war. It does not of itself constitute a policy. When I hear undue concentration on this aspect of the matter, I am worried that it means that not enough attention is being paid to some of the other major factors, of which the failure of British industry as a whole—not all of it, but substantial parts of it—to invest enough in new plant and machinery is one.

This new Clause is designed as an attempt to encourage this type of investment. How could it be done? I think that it would be difficult for the Board of Inland Revenue to do it. However, I do not think that, with the creation of new planning machinery, it should be impossible. I do not know how the National Economic Development Council will develop. I do not know how interested the Government still are in planning. I read an article the other day which suggested that their interest had waned somewhat in recent months. I should not be at all surprised. They have a reputation for securing gimmicks. Then, having played with them, they drop them and move on to the next one. I doubt that, even if they had some sort of conversion to the idea of planning, they are really prepared to take the steps necessary to make planning effective in this country.

If we did have an effective economic planning instrument in this country, one of its tasks would be to examine industries in turn and to see which were up

to date, which were efficient, which were lagging behind, and to dissect each industry and to bring the inquiry down even to major firms in the industry and compare and contrast their performance in exports and many other directions. This is a task which the nation will have to face if it wants to fulfil the social objectives which we have set ourselves. We cannot go on mouthing plans and proposals for hospitals, schools, roads, homes and the rest, and expect to achieve them unless we are ready to make drastic changes.

These drastic changes will involve considerable dissection and much greater knowledge of the capacity and performance of industry in order that we may raise its output, performance and efficiency. All this will be necessary. What I propose here is merely a tiny weapon in the armoury.

An economic planning instrument such as the N.E.D.C., properly constituted and differently organised, I think —that is a subject for another debate —could examine these industries and companies within them. It could then take what would undoubtedly be an arbitrary decision as to whether there was a case, and if so where, for ensuring that particular industries or particular companies should have special benefits in this respect.

We do it regionally now. We do it for the development districts. If we can do it regionally, why not do it nationally? I can see no reason at all in fiscal terms why we should not. But it means reorganisation. It means effort and will. It means the Government getting a move on. I frankly see little prospect of this, just as I see little prospect of the new Clauses being accepted. All I do hope for is that, by this series of debates we have had in the Committee during the past few weeks, which will be continued in the country, we shall awaken people generally to the failure of the Government to face the tasks which lie ahead of the nation. We have two rôles here. One is to convince the country of the unfairness of the present tax system. The other is to convince it of the Government's utter failure to take the necessary measures which would attain the aims I have in mind here.

I am quite ready to hear the Chancellor or the Chief Secretary, or some other butcher on the Government side, rise to his feet to cut these Clauses to pieces. As is well known, the Opposition cannot draft Clauses of this sort because of the limitations which are placed upon us by the rules of order and many other things. What I want to hear is not an artificial or technical destruction of these Clauses, but some attempt to answer the indictment which is increasingly being mounted against the Government, the indictment that, though they may will the aim of growth, they do not will the means to achieve it.

I have seen nothing at all since the introduction of the pay pause last July which convinces me that the Government have any practical proposals at all for endeavouring to secure the growth we need combined with the other factors which they set out in their policy. It is on that basis that I put these Clauses before the Committee.

5.45 p.m.

Mr. Archie Manuel (Central Ayrshire): It is with the greatest pleasure that I support the case made by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). The intention behind the two new Clauses is to spread the location of industry more evenly over the whole country. We can all agree on both sides that, because of the continued lack of proper incentives, or for other reasons, industry is not being located to meet the needs of the people. It is tragic that in many areas, particularly in Scotland, we are steadily losing many of our traditional skills because the traditional industries are fading out and nothing is coming in to replace them.
Members of the Government and Scottish Members have claimed sometimes during similar debates that the Local Employment Act, 1960, has been a big success. I cannot speak of what has happened in development districts in England. I have made a study of my own constituency and neighbouring constituencies, and of the position throughout Scotland as I know it. In Scotland the Local Employment Act has not measured up to present needs. It sadly lacks the incentives necessary for the retention of an even spread of industry to meet the needs of the people, and it

is failing lamentably to retain the population in the development districts. Although the Government can point to certain new industries being located in some areas, they have to admit that, generally speaking, more of the traditional old heavy industries are fading out and we have not managed to retain in employment a sufficient number of people to compensate for their disappearance. Inevitably, this leads to depopulation.
Unless industry is assisted, the future for many of our development districts holds nothing but inevitable decay. There will be a greater drawing off of population from the rural areas and development districts into the larger aggregations of population around our bigger towns. Everyone will agree that the constant and inevitable attraction of people to the Midlands, to Glasgow, to London and other large towns is a bad thing. Nevertheless, although everyone will agree about this and pay lip-service to the principle, we still do not have from the Government a policy which will do anything worth while to arrest the trend which is now unmistakable and which is causing great problems to arise.
It is natural that a Scottish Member should speak of Scotland in this connection and discuss how these two new Clauses would affect problems in his own area and in Scotland as a whole. The problem is growing throughout Scotland, as we know. It is increasingly difficult in my own area where, although we have managed to attract some new industries, most of them small industries —I am pleased with that success—we have not been able to clear the numbers of unemployed off the books at the employment exchanges. There is still over 6 per cent. unemployment in a fairly large part of my constituency.
However, I think that it is wrong to spotlight just our own constituencies. I do not want to be led along that line. I am particularly impressed by what is happening in Scotland as a whole, where large parts of the country are rapidly becoming denuded of their best people. In the seven Highland counties, for instance, there are immense possibilities, the best traditional skills in weaving, textiles, net-making and a host of other crafts which are passed down from one


generation to another; yet depopulation is continuing. Do not the Government ever consider that it would be a good thing to revitalise the Highland counties?
I would go further than these new Clauses. I welcome their intention to assist—

The Deputy-Chairman: That is just what the hon. Member must not do. He must keep to these new Clauses.

Mr. Manuel: I do not want to apologise, Sir Robert, since I have not committed the offence. I think that you are pulling me up too soon. I said that I should like to go much further, but I have not gone further. I do not want to ask for an apology from the Chair, but I feel that I should have been allowed to commit the mistake before being corrected. However, I have no wish to break any rules, and I will try to keep to the purpose of the two new Clauses so far as they relate to an increase in investment allowances. Sir Robert, I am sure that, being a lover of our Highland counties and streams and knowing the fishing and deer stalking possibilities, you will agree that it would be a very bad thing if the Highland counties were further denuded of their population.
The investment allowances suggested in the Clause could be used by the Government to induce industries to go to the Highland counties. The Government could themselves of their own volition help new industries over their teething troubles in the earlier years by taking action on the lines suggested in the Clause. The Government could assist these industries by placing orders for Government requirements. I see that the Minister of Works is very interested in what I am saying. He has a great Scottish background. His Department could offer many inducements. Scottish industry, with its traditional skill, by making things ordered by his Department, could be successful if industry went to these areas.
The best of the young people are leaving many areas of Scotland because industry is not going there. This applies to Wales with equal force. Industries are not going there because the areas cannot compete with areas nearer

markets or nearer aggregations of labour. Because Scotland's traditional skills and crafts are not being used, there is no work for the young women. There is an inevitable flow of young women from the Highland counties down to Glasgow or into England. Many of them do very good work in nursing or school-teaching. When there is an exodus of young women, there will inevitably be an exodus of young men. One needs only to examine the population statistics of some Highland counties to see what is happening.
I hope that the Government will have some concern to try to develop a new policy. My hon. Friend the Member for Cardiff, South-East said that he did not have much hope of the Government accepting the proposals contained in the Clauses. I hope that the Government will at least be sympathetic and offer some alternatives, if they cannot accept what is in the Clauses.
In many areas—some of them in England, many in Wales and Scotland —there is a continuing high rate of unemployment. Where this exists over a long period it is inevitable that the craftsmen and skilled workers leave rather than go to the employment exchange. They leave the area, and within a year or two the area is left with a pool of unskilled labour. When industrialists are asked to go there, they refuse because there are not the skilled craftsmen there to enable the industrialists to carry on satisfactorily. A hard core of unskilled labour signs on steadily at the employment exchange, but it is not their fault.

6.0 p.m.

Despite what any hon. Member may say, skilled men will not draw unemployment relief. They will move. Even though it means uprooting themselves and their families, they will go to England or abroad to earn the wages which their skills entitle them to. Their long apprenticeship and other training entitles them to a much better reward than they would secure by unemployment benefit.

Mr. William Hamilton: Does my hon. Friend remember that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) suggested in the House of Commons about a fortnight ago that the unemployed


man was quite content to remain unemployed in Scotland because of the very generous dole payments?

Mr. Manuel: I read something to that effect. I will merely say, in passing, that it is quite untrue. It is a terrible slight against Scottish craftsmen. There is an exodus of 30,000 people a year from Scotland seeking employment in other areas. This is inevitable. It has happened in my constituency. The skilled craftsman will not sign on for long at the employment exchange before he risks all the upheaval of shifting his home, if he can get a house elsewhere, taking his children away from school or from employment, going to another area where he can keep his family in comfort and using the skill he has gained in full-time employment.
For all these reasons, I emphatically support the case made by my hon. Friend the Member for Cardiff, South-East. I hope that the Government Front Bench will give some support and sympathy to the problems which exist in development areas.

Mr. Raymond Gower: The hon. Members for Cardiff, South-East (Mr. Callaghan) and Central Ayrshire (Mr. Manuel) spoke fluently and forcibly. What I could not understand was that running through their remarks was a sort of sentiment that the Government have no desire to bring help to development districts. That seemed to be the mood and spirit of their speeches. That is completely at variance with the facts. In pressing for help for development districts the Opposition, are knocking at an open door. Successive Ministers and successive Governments have shown their desire to help these areas by various means. The Opposition have come forward today with a different method of assisting these areas. I certainly do not know what my hon. Friend will say about these Amendments.

Mr. F. A. Hayman (Falmouth and Cambourne): The hon. Gentleman does know.

Mr. Gower: The hon. Gentleman is quite wrong about that. I have not the slightest idea. If my hon. Friend takes the view that these methods are not the best methods, I do not see that the hon. Member will then be able to say that

the Government have no desire to help these areas.
As the hon. Member for Cardiff, South-East has already admitted, there are many other methods of bringing assistance to these areas. They are embodied in the Local Employment Act, Which is mentioned in the first new Clause. They are being put into effect by the refusal of development certificates in certain parts of the country, a policy which has been rather forcibly applied in recent years. They are also applied in B.O.T.A.C. arrangements and the arrangements for advance factories being built in some parts of the country.
The Opposition, reasonably, have come forward with yet another method which they suggest would be of great benefit. I certainly do not object to the motive, but I do not believe that it is the right method. The investment allowance has a different purpose from the legislation which has been passed to steer industry into these areas. As I understand it, the investment allowance is designed ultimately to make our industry more efficient. It is designed to stimulate the improvement of industry by investment in capital equipment. That is a general aim. It is not designed to improve industry in a certain locality. On the other hand, the legislation to which I have referred, the policy of refusing development certificates, the B.O.T.A.C. arrangements, and the building of advance factories, are all designed expressly to help development districts. There is a definite and important difference.
The hon. Member for Central Ayrshire said that we could expect, if things were done properly, that industry would be evenly distributed over the whole of the United Kingdom. That was the inference behind his speech. I do not see how anybody can envisage such a prospect, because some of our great industries, such as steel and chemicals, are almost insatiable in their demands for labour.

Mr. Manuel: I have a note of the words I used. I said that industry would be more evenly spread.

Mr. Gower: I accept that correction. I thought that the hon. Gentleman went somewhat further. The large industries which have grown up since the First World War and, even more so, those


which have grown up since the Second World War need large numbers of personnel. They need enormous labour forces. A new factory is shortly to be opened in Wales. The hon. Member for Cardiff, South-East is well acquainted with this, because it is in his constituency. A Rover factory is shortly to commence operations in Cardiff. It will require thousands of men. It is possible that some of the men will go there from other parts of the country. That is not necessarily a bad thing, because our industries, to compete with other countries, must include large units. I believe that that is accepted on both sides of the Committee.

Mr. F. A. Burden: My hon. Friend is going a little wide of the subject by saying that there must be a great concentration in industry. We must not ever lose sight of the fact that there are a great number of small industries which are highly valuable and could be diversified.

Mr. Gower: I was coming to that. I said that what we are trying to do is to steer as far as possible into the areas which have not these large industries and have no immediate prospect of getting them, industries which are consonant in size and in their labour demand with the labour force available in the areas. That has always been a very difficult job. It is a job which is never easy to solve, but it has been done. The hon. Member for Central Ayrshire asked whether this policy has had any success anywhere. It has been magnificently successful in South Wales.

Mr. William Ross: Who told the hon. Member that?

Mr. Gower: The hon. Member for Cardiff, South-East knows it.

Mr. W. Hamilton: Two years.

Mr. Gower: It has been successful under successive Governments and never so successful as in the past few years. South Wales, which was formerly a development district, is fast becoming one of the boom areas of Britain. I understand that to a lesser extent the policy is meeting with a good deal of success on Merseyside.

Mr. Callaghan: I want the hon. Gentleman to face my argument. The

core of my argument is that, whatever success has been achieved in South Wales, which is substantial, 45 per cent. of the new jobs created in this country during the last decade have been within a radius of forty miles from the centre of London. We ask for a more equitable distribution of industry, not necessarily to give employment, but so that we can get rid of the land-hungry world we are living in.

Mr. Gower: I have said that this Government and their predecessors subscribed to that view. The hon. Member said that many jobs have been created in and around London, but I think he will accept that also many new jobs have been created in Wales and on Merseyside.

Mr. Callaghan: The total number of people working in South Wales and on Merseyside today is very small, a matter of 2,000 or 3,000 more than ten years ago. The areas have full employment, but they are remaining stationary while the position is ballooning in the big area around London. That is the problem which the Government have not yet tackled.

Mr. Gower: In mentioning a figure of 2,000, the hon. Member disregards the fact, of which he knows, that 8,000 will be employed at Llanwern, near Newport.

Mr. Callaghan: I am talking about total numbers.

Mr. Gower: So am I. The hon. Member knows that there will be 8,000 or 10,000 in the Newport area, a comparable figure in the Cardiff area, and a somewhat smaller figure in the Llanelly area.

Mr. Callaghan: I will not interrupt the hon. Member again. I am not talking about individual firms, but about totals. According to the figure I have been given, the net loss of insured employees between 1951 and 1959 was 32,000 men, women, boys and girls. That number left for work either in the Midlands or around London. It is that pattern I have been talking about, not the creation of 8,000 jobs at Llanwern.

Mr. Gower: The tendency before the war was for people to leave South Wales.


but now the tendency is for them to come back. [HON. MEMBERS: "No."] I
can assure hon. Members that a substantial number of people who have left are now coming back to take important posts in these new industries.

Mr. Manuel: I wish the hon. Member would open his mind to the problem I posed, because he was replying to points I made and I think he has been replying mistakenly. In the whole of the seven Highland counties in Scotland, under present inducements we cannot get industry at all. Is the hon. Member prepared to write oft half Scotland completely? Should it just become depopulated, or is he prepared to give further inducements to industries to go there?

Mr. Gower: No one wants to write off any part of the country, but the hon. Member will admit that inducing factories to go to the north of Scotland becomes more difficult the further north one goes. We had a similar difficulty in North Wales as compared with South Wales, but now that problem is getting better. Four years ago we were not able to get industry to go to Caernarvon-shire, or Anglesey, but that is happening in some degree now. The benefits of this policy have been seen in some parts of the country. I sincerely hope that they will be seen increasingly in other parts of the country very shortly.
I do not think that the aid suggested in these new Clauses is the right way to deal with the matter, but that does not mean that I am not entirely in agreement with the objective. Successive Governments, including this one, have pursued this policy with marked success in some parts of the country and with less success in other parts because the conditions there have been more difficult.

6.15 p.m.

Mr. Goronwy Roberts (Caernarvon): The hon. Member for Barry (Mr. Gower) referred to my constituency as one of the difficult areas which is now beginning to benefit from the application of the principle of the Distribution of Industry Act. Had we been in power in the last ten years I should not have had to talk about these industries as often as I have done.
The reply to the hon. Member is that the comparatively little success which has been obtained in places like Caernar-

von—and no doubt my hon. Friend the Member for Anglesey (Mr. C. Hughes) will say the same of his district—has been due to the most extraordinary pressure during the past ten years on the Government who at last are beginning to move—not because they believe in the distribution of industry, but because the entire population, including their own supporters, are up in arms against them.
If the hon. Member had attended the Adjournment debate which I initiated the other night, he would have heard what the position in Caernarvonshire is. Apart from this single instance of industrial advance, the rest of the county is in dire need of the kind of fillip and inducement which these two Clauses would in part provide. I with to support what my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said. I thought his speech one of the best statements I have yet heard of the case for the distribution of industry, not only for rescuing provincial areas in danger of becoming socially and economically derelict, but also for trying to do something to solve the impossible situation which is growing up around London and other big towns.
The two Clauses refer to development districts. Those are areas of heavy and persistent unemployment. My hon. Friend gave a list. In my constituency now, at a time approaching mid-summer when seasonal employment is available, the unemployment rate is 6 per cent. or 7 per cent., and in winter-time it will be doubled. These are districts which in the past depended on one or two heavy industries. The only solution to this persistent problem of unemployment in such districts is to introduce new industries to take the place of the old and also to do what we can to sustain the old which in many cases have declined but ought not to disappear.
I do not apologise for introducing this argument in reference to my own county. The position there bears out word for word what my hon. Friend said when he was opening this debate. There there is a static population of about 120,000, and it was 120,000 40 years ago. There we have declining local government revenues. The rateable value is
£1½ million today and it was £1½million five years ago. These are serious and dangerous trends. The reasons for this decline are largely that the old industries


of agriculture and slate quarrying have declined and no new industries, or very few, have come in because insufficient inducement is given to now industry to come to such an area.
Reference has been made to the Local Employment Act, 1960. We have benefited very little from that Act. The new development in Caernarvon to which the hon. Member for Barry referred did not come under that Act. That was a factory which was introduced by a firm of international renown and resources. That firm did not have to depend on the Government for financial or other aid. What we have to address our minds to is the attracting of small and medium-sized new industries of a modern character to these districts. When we talk to such industrialists, we speedily find that the inducements already available administratively and fiscally are either not sufficiently forthcoming under the administration of this Government or they need to be added to on the lines suggested by these two Clauses.
I have spoken to an industrialist of a medium-sized industry who found that the capital cost of establishing his industry in a completely new area like Caernarvon was so great that at the end he had to withdraw. The kind of concession contained in these Clauses might well tip the scale in favour of such industrialists venturing to areas like ours. The other day the Parliamentary Secretary to the Board of Trade, when I raised these matters, gave some figures which might be of interest to the Committee. He said on 24th May:
In existing circumstances it has been difficult to interest prospective industrialists in South Caemarvonshire, but I can tell the hon. Member that it is not for lack of trying. He will be interested to know—although it may not sound a great deal—that in Caernarvon-shire as a whole, in the last twelve months, 14 sites and five buildings were suggested to 26 industrialists, 16 of whom either came themselves or sent representatives to see them. Only one has within this period set up in the county."— [OFFICIAL REPORT, 24th May, 1962; Vol. 660, c. 831.]
There were 26 industrialists examining possibilities in a development district and finding that under existing inducements they could not go to those districts. Clearly we must add to those inducements. In the experience of a great many of us the inducement which might turn the scale is an increase in invest-

ment allowance to industrialists proposing to come to such a district.
I mentioned the way in which these Clauses might help to develop existing industries in these districts. For two centuries, thousands have been employed in the slate industry of Caernarvonshire and Merioneth. During the past quarter of a century the competition from cheaper and inferior roofing materials has meant that the number of jobs available in those quarries has declined steeply. In 1913 as many as 14,000 men were employed in the quarries in those two counties, but by 1938 the number had gone down to 8,000 and today the quarries employ barely 3,000.
There in microcosm we have the kind of thing which happened in South Wales and Durham where traditional heavy industry declined for various reasons and the employment provided by it contracted at a rapid rate. The consequences have been social and cultural as well as economic. It is tempting to some rather cold-blooded social observers to dismiss the slate industry and say that it ought to disappear because the economic facts are against it; but that is not so.
Hon. Members may remember that a few months ago great storms ravaged the north of England. Immediately there was a need for millions of pieces of slate to repair the roofs which had been damaged in that area. The condition of the industry, however, had been allowed to decline to such an extent, with no Government assistance whatever, that it found very great difficulty in meeting this emergency.
There are 5 million houses roofed with slates in Great Britain. If this industry, which is largely concentrated in one small corner of Wales, is allowed to disappear, whenever there is need for slates for those millions of houses the contractors will have to decide to re-roof at a colossal capital charge. It will cost the country in labour and finances far more than steps taken now to place this industry on a viable basis with a view to its being able to feed the repair market of that great section of the housing of the country would cost.

Mr. George Darling (Sheffield, Hillsborough): Is my hon. Friend aware that many builders in the Sheffield area are


still engaged in repairing roofs damaged in that storm? They are complaining about the shortage of slates.

Mr. Roberts: That is the point I am making. This industry is typical of the kind of industry we ought to assist in a development district. Because the assistance in the past has been very small, or non-existent, the industry has great difficulties with which to contend. It has been allowed to decline. Only when a national calamity arises do we realise that it would have been in the national interest to have maintained the industry in such a state that it could fulfil sudden and extra demands made upon it in the way I have described.
I take it that these Clauses which refer to development districts, include industries and undertakings already operating in those districts. I can think of no industry in any development district which would benefit more from these provisions than the slate industry in North-West Wales. This is an industry where production costs are very high, unless automation is introduced on a large scale. Many hon. Members will know that in order to win slate in the open-cast quarries, it is necessary to remove from the quarry large quantities of over-burden, a completely unproductive task which adds to the aggregate cost of the slate. Excellent as the slate is, its cost must bear that burden.
Therefore, one way to assist this old and honourable industry, which is a nationally necessary industry, would be to give added support to those slate quarry owners who are trying to increase the amount of automation or mechanisation in their quarries. These two Clauses would immediately benefit the industry and the housing system as a whole. My hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) spoke to me the other day about the P.E.P. report which referred to the fact that since the war many houses have been built which have now been found to be seriously deficient in roofing and other respects. Let us use this kind of inducement to slate quarry owners to improve their production and reduce their costs and their prices, so that the houses of the future will not come under such criticism as that.

Mr. John Robertson: My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was unduly pessimistic when he suggested that the Government would not accept the two new Clauses. I am sure that they will feel able to accept them, as in the many by-elections which are now taking place all over the country, particularly in Scotland, they are saying that their purpose is to get better distribution of industry. Here is a practical method of achieving their declared policy. I am aware from debates in Scottish Committees and in the Chamber and from answers to Scottish Questions that what the Government say and what the Government do do not always coincide.
The Committee will be aware of the great concern of the people of Scotland on the questions of employment and unemployment, particularly about the continuing and growing loss of population by migration. But Scotland is exporting not only its population and its skilled workers but its housing problems, especially to London, Birmingham and Coventry and other large industrial centres which already have their own housing problems. This is, therefore, a matter of concern to all hon. Members, not just to Members who represent development districts.

6.30 p.m.

I am one of those who believe that the problems of the development areas can be solved only by the direction of industry so that in each area we build up a complex of suitable industries of sufficient size to be able to continue to grow of their own volition. But the Government have said otherwise for many years. They have been saying that they are concerned to find remedies for the problems of the development districts. Here is a remedy.

All Members from Scottish constituencies know that the Local Employment Act has so far failed to achieve its purpose. Larger carrots are needed. The proposals of the new Clauses may not solve the problem, but they will help and will encourage firms in the areas to become more efficient— and we have been told that that is the purpose of the investment allowance— and they will also attract other industries into the areas.

The Local Employment Act applies only when there is unemployment in an area, but unemployment can be cured in many ways, and one of the ways in Scotland is by migration, by exporting the problem. When migration occurs, the problem no longer exists for the Government, but for Scotland it is aggravated. If the Government are serious about the distribution of industry and seeing that jobs are taken to the development districts, they should grasp this opportunity with both hands. They should take the chance of making Government policy much more effective than it has been for the last ten years.

Mr. Harry Randall (Gateshead, West): The new Clauses aim to increase the investment allowance for expenditure in development districts. Their purpose is to attract new industries to the areas in which they are needed. There is no doubt that in areas such as the North-East further incentives are needed. I will give some examples. In March, this year, I asked the Minister of Labour for some figures of unemployment in the years 1951 and 1961. I wanted to make a comparison. I was told that unemployment in the North-East in 1951 was 29,360, while in 1961 the figure was 40,245— ten years of Toryism. That represents an increase of no less than 37·1 per cent.
The North-East is an area where every effort ought to be made to encourage new industries. It went through difficult times before the war, a war in which it played a tremendous part in order that the nation might survive. It had every right to expect that the country would look after it after the war. But, in the event, unemployment has risen by no less than 37·1 per cent. in ten years.
How has it fared under the Local Employment Act? One would have thought that such an area was entitled to its share of new factories and new extensions under the Act. The hon. Member for Barry (Mr. Gower), who has now left the Chamber, having made his speech, may have been right when he said that a larger percentage had been given to Wales.

Mr. W. Hamilton: On a point of order. May I draw your attention to the

fact, Sir Samuel, that there is not a single back bencher on the Tory side of the Committee? May I also draw your attention to the fact that there is not a quorum?

Notice taken that 40 Members were not present:

Committee counted, and, 40 Members being present—

Mr. Randall: I was hoping that as a result of that urgent call we would have had hon. Members filling the benches opposite in order to listen to what I regard as a strong argument in favour of the new Clause, saying that in all modesty. At least I have the satisfaction of seeing that the hon. Member for Barry has returned.
I was saying that I would not disagree with some of the things he said about new jobs, new factories and new extensions having gone to Wales, but he was quite wrong in what he said about the rest of the country, although he may have been somewhat right about the North-West.
I want to quote the figures from the Board of Trade's annual report on the working of the Local Employment Act, 1960. Table II of Appendix 6 gives regional proportions of new factories and extensions in the manufacturing industries. For the area from which I come and a constituency in which I have the honour to represent, the North-East, it is estimated that additional employment created under the Act from 1st April, 1960, to 31st March, 1961, was 4·7 per cent. compared with an increase in the number of insured workers of 9·7 per cent. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was right in what he said about the tendency in the South-East, for in London and the South-East there has been an increase in new jobs of 14·2 per cent. while the number of insured workers has increased by 21·2 per cent. In other words, the same ratio of jobs has gone to London as to the North-East. Unemployment in the North-East since 1951 has risen by about 37·1 per cent. There is a real need for something to be done. If the President of the Board of Trade were here and were asked whether he was satisfied that the maximum employment had been provided under the Local


Employment Act, he would say that he was dissatisfied. That being so, there is a strong case for the new Clause.
As I said, we have an unemployment figure in the North-East of about 40,000. There are only 22,000 jobs in prospect, which makes a strong case for the encouragement of firms to go to the North-East.

Mr. Norman Pentland: On 21st May the Parliamentary Secretary to the Ministry of Labour told me at Question Time that 22,000 jobs were in prospect in the North-East Region, but on 28th May the Parliamentary Secretary to the Board of Trade informed me in a Written Reply that 21,000 jobs were in prospect. From one week to another we had lost 1,000 jobs. In our view, the Government are indulging in guesswork about the jobs in prospect in the North-East to cover the serious unemployment prevailing there.

Mr. Randall: I accept that, and it looks as though the right hand does not know what the left hand is doing.
I wonder what the 22,000 jobs will represent when they reach the register of the employment exchange. I feel that it does not mean that unemployment will fall by 22,000. I suspect that it will fall by only about 11,000.
There is a good case for the new Clause, and I hope that the Committee will respond to the arguments and give real encouragement to the unemployed workers of this country. It is difficult to get figures over in the House, but in my constituency I have 2,400 unemployed. If we lined them up four in a row, how long a procession would that make walking through Gateshead? I suggest that it would be 600 yards, four men a breast, walking along the streets of Gateshead like an army. In the North-East as a whole, the figure is about 40,000. Something should be done about this, and the new Clause gives us an opportunity to do it.

6.45 p.m.

Miss Margaret Herbison: I support these new Clauses, but, like most hon. Members, I wish to talk mainly about the first. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) thought that the

Government's reply would be a refusal. Having listened to the debate and watched back-bench Members on the Government side, I have no doubt that the reply will be a refusal.
When my hon. Friend the Member for Fife, West (Mr. W. Hamilton) drew attention to the fact that we had no quorum, there was only one Government back-bencher present. In a debate of this kind, which in a very small way might help to ease unemployment, surely we should have on the Government back benches hon. Members from the north-east of England and certainly from Scotland, all vying with each other to try to get the Government to accept this modest new Clause. Far from having their speeches, we have failed even to get their presence. At the moment we have only one Conservative back-bencher present from Scotland.
The first new Clause asks for an increase in the investment allowance. It asks for a very modest increase in investment allowances for industrial buildings, machinery and plant. It is an attempt to give another incentive and to attract more industry to the development districts. We know that even if the Government accepted the new Clause it would not work wonders, but in the present situation in many development districts, we on this side of the Committee are willing to try almost anything to attract these industrialists into those areas.
After nine or ten years of Tory Government, they introduced the Local Employment Act, which has attracted some industry to some of the development districts, but it has not done very much for my county and my country. Taking the country as a whole, our unemployment position is still the worst of any region in the United Kingdom, and for that reason I support the new Clause. Today we have almost 80,000 people unemployed. When he makes speeches in the House and outside, the Chancellor always asks the workers to produce more. If we could get those 80,000 people in jobs, they would be delighted to produce, but many of them are longterm unemployed lying on a scrap heap with no chance or hope of producing at all.
The coal industry in Scotland has been badly hit,and my county,Lanarkshire,has been particularly badly hit. The United Kingdom steel industry is not working anywhere near capacity, but in Scotland it is working only between 55 and 60 per cent. of capacity. That is a very serious matter for us. In Smith and McLean's steel works, part of the Colvilles group, a few years ago we had 1,100 men working happily and producing. There is not one man in it today. It is true that the cold rolling part of the new steel strip mill is next door, but it started only a comparatively short while ago to recruit labour, and I am informed that when it has fully recruited it might take only 50 per cent. of the workers who were employed in the old steel rolling mills. That position can be multiplied in many parts of the country.
This year the shale mines in West Lothian will close. The Government will be aware that there is an important matter to be decided in West Lothian in the very near future. In the Glasgow Herald today I read,
Many Question Marks in West Lothian.
Another heading is,
Economic Shake-up.
I read:
The county, one of the smallest in Scotland "—
the whole county forms one con-stituency—
is in the throes of probably its most severe economic shake-up since the industrial revolution. Topographically more rural than urban. and delightfully so in some parts, it has at the same time sustained about two-thirds of its population on a tradition of mining which goes as far back as the reign of Alexander III, and of heavy engineering. But heavy engineering tends not to grow, and mining to fail.
That is the case. Quite a number of pits have been closed there. It continues:
In April the shale industry died".
— and the Government have to take some blame for that because of their fiscal policies and their unwillingness to help this industry to try to survive. The paper says that
the shale industry died, and with it the sole reason for keeping Baads Colliery in operation. Probably 1,500 men lost their jobs. The fear of further pit closures remains. Bo'ness docks were closed and so were timber yards and some boat-building by the Forth shore.

What a picture that is in the industrial part of West Lothian. On the back page we are told about some of the jobs in the pipeline in that area, but we are tired of hearing about these jobs year after year which are in the pipeline for our Scottish people.
Mine is the next county— the biggest industrial county in Scotland. Areas such as Coatbridge and Airdrie have very high unemployment. Some of the other mining villages are almost derelict in respect of employment. We on this side of the Committee have always felt that the Government have failed to use the industrial development certificate as it should have been used. If they had used that certificate there would have been a real chance for the area, in which pits have been closing since 1947, to have had new industries brought there. We hope that there will be a strengthening of the industrial development certificate, but we have seen that the provisions of the Local Employment Act are not sufficient to attract the number of industries which we desperately need.
A fortnight ago I asked a Question about the unemployment rate amongst youths in Lanarkshire, and from the answer I found that for every three people under 18 years of age without a job, there was one job. In other words, three young people in that industrial county are chasing every vacant job. What a difference when we look at the position in London, the South-East or the Midlands. In Warwickshire, which I listed in my Question, there are three jobs for every one young person unemployed. The Government should be extremely concerned about these things, and particularly about the lack of job opportunities for young people, not only in Scotland but in the North-East and other areas where unemployment is high.
I do not think that the new Clause will work miracles, but at least it will be an earnest of the Government's desire to give another incentive, if they accept the new Clause, and to create some chance of attracting perhaps a little more industry into the areas which so badly need it.

Mr. Cledwyn Hughes: I have come to the conclusion that the hon. Member for Barry (Mr. Gower), who is not at the moment in his place, is unique in that he must be the only


living Welshman who is completely satisfied with the present Government. In the course of his speech, he omitted to describe the record of the present Government since 1951. He forgot to mention that round about 1953 the Conservative Government neutralised the Distribution of Industry Act and that between 1953 and 1960 there was hardly any distribution of industry at all. In 1960 that Act was dismantled and the policy of distributing industry to those places where it was needed was abandoned. The Local Employment Act took its place.
What must be faced by the Committee and by the hon. Member for Barry is that for seven years no action was taken by the Government to alleviate the problem in areas of acute and chronic unemployment and that even today, after the Local Employment Act has been operating for two years, in most of the affected areas unemployment is higher than it was in 1951 when the Labour Government left office. That is the situation. After 11 years of Conservative Government and of so-called Conservative prosperity, we are worse off than we were in 1951, six years after the end of the war.
When one studies the growth of industry— my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) described this in his excellent speech— particularly in London, where its growth increases the traffic and housing problems, and when one studies the position in Scotland, Wales, Cornwall and other areas, one realises— this is the crucial fact— that the Government have completely lost control of the distribution of industry situation. The reins are in the hands of the industrialists, not the Government. We want a change of Government so that the reins may be placed in the hands of the representatives of the people, so that industry may be guided to the areas where it is needed, not only to the areas of high unemployment but to districts of acute depopulation, such as Mid-Wales.
The central question in relation to the proposed new Clause is whether or not the provisions of the Local Employment Act are enough and whether the inducements offered to industrialists under that Act are adequate. The principal powers that no doubt the

Financial Secretary will outline to us— conferred on the Board of Trade Advisory Committee by Part I of the Act— are, first, to acquire land and buildings and to build factories and other premises for sale to suitable undertakings; secondly, to make building grants to undertakings providing their own premises; and thirdly to make grants or loans to undertakings for their general purposes. These are useful powers if used effectively. My criticism of the Government is that so far they have failed even to use the powers of the Local Employment Act to the full effect.
The Local Employment Act has one considerable drawback, namely, that there is a considerable delay between the date of the application for assistance and the date when the decision of B.O.T.A.C. is made known to the applicant. There is a lapse of three or four months. One accepts, of course, that there should be a reasonable delay. After all, public money is being spent. But I feel strongly that some more immediate inducements to the industrialist are needed, something which will help the industrialist at once so that he can say "If I decided to go to Anglesey, Falmouth, Stranraer or some other area of high unemployment, I can count on this assistance whatever happens to my application to B.O.T.A.C." After three or more months of long and frustrating delays and after meeting representatives of B.O.T.A.C., he may be told that his application is rejected. If he is undecided what to do, the Clause may turn the scale.

7.0 p.m.

There are other industrialists who may for some reason or another decide not to make an application under the Local Employment Act but nevertheless to enter an area of high unemployment. It may be that because of frustration or other reasons they may decide to proceed on their own resources. I know one firm which decided to come to a development area in North Wales. After long negotiations it decided to abandon its application to B.O.T.A.C. but to go to the area anyway. Such industrialists should be encouraged.

I do not think that the problem of our unemployment areas will be solved by the Local Employment Act— certainly not by the present Government. There


must be some positive, immediate assistance to industrialists. This is one way of doing it. The Clause represents the type of prompt assistance that can be given to suitable industries to go to such areas. I do not know what the Financial Secretary will say, but I hope he will be mare forthcoming than he was in regard to apprentices last Tuesday. We need the kind of inducement this Clause envisages, and I hope the hon. Gentleman will give us an encouraging reply.

Mr. Hayman: Unlike my hon. Friend the Member for Anglesey (Mr. C. Hughes), I am fairly sure what the Financial Secretary's reply will be. Last year we discussed help for the tin mines. The tin mining industry of Cornwall was important, and it may still be important. The Financial Secretary came to the Committee with a speech already prepared. The Chancellor of the Exchequer was, however, more receptive to the arguments put forward from this side of the Committee. But the result was the same. On Report stage the Chancellor delivered the speech which his hon. Friend had prepared for the Committee stage.
I make no bones about restating the need for some incentives for new industries in the development districts. The whole of west Cornwall is such an area. There are at the moment signs of a revival of interest in tin mining. Surely this is one small concession which the Government might make to bring about a revival of this once important industry. I beg the Financial Secretary to consider this point because it is a vital matter to west Cornwall.
Like many of my hon. Friends, I am very unhappy about the operation of the Local Employment Act, 1960. I think I am right in saying that not a single new industry has come into the Falmouth and Penrhyn area of my constituency. Many applications for B.O.T.A.C. have been made, but they have been turned down. Because of the seasonal or casual nature of employment at Falmouth docks, at times the rate of unemployment is extremely high, and the area looks to the introduction of new industries to help those who would prefer a smaller rate of pay but security of tenure. I know many men

who worked in Falmouth docks but have gone into other less well paid industries because of the need for security in employment. I beg the Financial Secretary to appreciate that this is a serious matter.
I would point out that the great firm of I.C.I. took completely away an industry from the part of my constituency in which I live— Camborne and Redruth—an industry which five years ago was employing 500 people. Many of those then employed have perhaps retired or, being married women, have left employment, and so they are not registered as unemployed. But what has B.O.T.A.C. done to help any new industries which might come to occupy the factory which I.C.I. deserted, so shamefully, as I think — because this was an industry which had grown up in my town for 130 years?
I ask the Financial Secretary and the Chancellor to bear in mind that these areas of high unemployment still have to carry very high interest charges because of very heavy investment in social services— such as housing, drainage, water supply, schools and so on in Camborne and Redruth. The present figure is more than £ 2 million for a population of 35,000, and that is likely to increase by £ 750,000 or more. There is a need for a new sewerage scheme in one part of the district and a need for additional water supplies for the whole district.
The extraordinary thing is that at the very moment that the Government are refusing to help us very much they are giving a subsidy for the building of vessels in foreign shipyards. That is an extraordinary thing to do. Here is one small way in which the Chancellor can help west Cornwall. We have known very severe unemployment in the past. In my constituency in the 'thirties the average unemployment was 25 per cent. — one in every four of the workers was unemployed.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) has already drawn attention to the fact, and I want to emphasise it, that 45 per cent. of the new jobs created in the last 10 years have been within a radius of 40 miles from the centre of London. On many occasions during the 12 years I have been in the House I have asked


Treasury Ministers to pay more attention to the outlying areas of the country and less to the area around London regarding the building of new factories. Always I have had the same sort of excuse why more is not done for the outlying areas, and I hope that tonight the Financial Secretary will not turn down these proposals but will, for a change, accept them.

Dr. Alan Thompson: The problem which we hope the proposed new Clause will go some way to solving has been with us for a long time. It has been with us since the 'thirties, and it is a serious one. It is simply that the geographical distribution of manpower in Britain has become distorted. Since the 'thirties it has involved a steady flow of economic activity from the parts we are seeking to assist to London and the Midlands.
The reasons why industries were attracted in the 'thirties to certain areas, are understandable. First, it was that the basic industries were contracting during a period of deflation. Today, history seems to be repeating itself. No one is suggesting that the deflationary situation today is the same as the 'twenties and 'thirties but it is true that the problem of the contraction of basic industries is intensified if at the same time as we are trying to solve this problem, the economy is given a deflationary twist. The replanning and reorganising of our basic industries can be done more easily if the Government are not giving this deflationary twist at the same time.
Regarding the longer-term problem, we must recall that in the 'thirties there was the release of new industries from their traditional need to cluster around the coalfields. It made industry more mobile and less dependent on the coalfields and, as a result, industry gravitated to the bigger markets. The whole question of industrial gravitation to these bigger markets is a vicious circle, because the bigger the market the bigger the gravitation of industry. As the markets today still more enlarge, more manpower goes to them That makes them even bigger, and the spiral continues. The market goes on expanding because of the obsession on the part of many industrialists that they must

place their factories near to these big markets.
One hundred years ago it was the position of the coalfield which decided a factory's location, but today it is the size of the market— and the market gets bigger, manpower increases and the problems of housing and transport become intensified. The Labour Government made a bold effort, with their policy for new towns, to stop this trend. This was a great experiment and one which we wish to see continued.
I agree that the drift was halted to some extent during the war. In wartime conditions industry sorts itself out again and spreads itself more evenly through the country and to the periphery, for two good reasons; first, because of the state of full employment and a buoyant economy required in order to wage total war— a lesson which we might apply to peaceful uses in these days— and because industry was planned and, secondly, because of the need for the strategic dispersal of our factories. There is still good reason for giving incentives for industries to spread in order to make ourself less vulnerable to attack during war.
I said earlier that the drift back to the pre-war pattern was halted by the Labour Government. That Government's methods of tackling this problem were wider than the proposals in the proposed new Clause. However, the present proposals form part of the same pattern to which the Labour Government worked. That Government placed emphasis on the planned location of industry and my hon. Friends— and I believe a number of hon. Gentlemen opposite— will agree that the unscrambling of this planning must be laid firmly at the door of the present Government. We consider that policy of dismantling our planning machinery to have been disastrous.
I have said enough to indicate the type of problem we must tackle and, indeed, that the problem exists. It is ridiculous that, in this island, we should not make a determined effort to reallocate industry and manpower more widely for the reasons I have explained. For instance, in my part of the world, Fife is being drained of its population— yet it is a county with great economic potential. It has access to ports. In recent


years this area has spent £ 30 million of what we might call social capital on water supplies, housing, communications and education. It is now spending a great deal of money on beautifying the area to remove the ravages of the industrial revolution so that when industry comes, if it does come, it will be in an area of beauty with a pleasant environment. After all, there is no reason why we should retain that nineteenth century attitude that industries and factories must be ugly. My constituency, with its disused colliery areas, aften swamped and derelict, suffered particularly in the past. Fife County Council is planning to do a splendid job repairing this damage.
Few parts of this area are more than a few minutes from Edinburgh Airport, which in turn is only a short journey, in space of time, from London. The transport difficulties which are often raised in connection with development areas are often exaggerated. It took me longer recently to get from Westminster to Ealing Broadway than it did to get from London Airport to Edinburgh Airport. Indeed, we often exaggerate the transport difficulties for executives who come to serve in firms in these areas, and the costs involved in distributing the products of these firms.

7.15 p.m.

This is a small island and if countries like America and Russia can spread their industries and still produce efficiently and get their goods to the markets, there is no reason why we should continue with this perpetual obsession of having our factories on the doorsteps of the biggest markets, especially the London one.

I know that the Financial Secretary is not only an economist but has aesthetic tastes, and I am sure that he will agree that there is something to be said for diversifying the industry and our economy on aesthetic grounds. My own constituency is set in beautiful scenery and it is only right that the factories and those who work in them should have congenial and beautiful surroundings. Instead of industries going to the smoke and diesel-filled streets of the London and Midlands districts they should be encouraged to come to these areas.

I often feel that the Financial Secretary is unsuited to reply on questions dealing with the decline or stagnation of

the economy. He is so vigorous, expansive and booming that he should deal with economic expansion and leave the Economic Secretary to deal with conditions of depression and the more astringent conditions of the economy. Perhaps the Government might consider allowing the two hon. Members to have dual rôles.

Mr. Douglas Houghton: Would my hon. Friend care to say to which subjects the Chancellor of the Exchequer might reply?

Dr. Thompson: That would lead me too far afield. However, reverting to the two Secretaries, the Government might consider allowing one of them to be a spokesman of boom and the other to be a spokesman of slump, like character in some mediaeval morality play.
The Government can no longer shelter, as they did in the 'thirties, behind the difficulties of finding out the different problems of the regions. The proposed new Clause is designed to give preference and to admit the special problems of the regions within the economy as a whole. In the 'thirties it was difficult to do this. The figures regarding manpower, employment in industry, occupations, and so on, were not available region by region or, Where they were available, the Board of Trade, the Ministry of Labour and the Registrar-General all had different methods by which they calculated their regional figures. That made planning virtually impossible.
These problems no longer exist and I urge the Treasury to think more regionally. Their sights are sometimes so fixed on the national criteria—the national income and the gross national product— that they overlook the regional picture in the national whole. The Treasury must get rid of its national obsessions and look a bit more at these regional problems.
I was impressed by a metaphor used by my hon. Friend the Member for Gateshead, West (Mr. Randall) when he said that he would rather see unemployment spoken about in a different way. Rather than have the figures of unemployed listed in a register, my hon. Friend would rather see the people concerned lined up in twos or fours, as human beings. That was an impressive metaphor because, after all, once we


have gone through all the elaborate statistical arguments we are essentially dealing with a human problem. It may not be as tragic as it was in the 'thirties, but it is, nevertheless, extremely disturbing. Regional figures should not be lost or obscured in the propaganda about national affluence or prosperity. I hope that our proposals today will jerk the Treasury into looking at the problems of the regions, and, more important, galvanise them into accepting the new Clause, so that they may not only study the problems, but go some way towards solving them.

Mr. Edward Milne: I do not want to follow my hon. Friend the Member for Dunfermline Burghs (Dr. A. Thompson) too closely on the comparison between the Financial Secretary to the Treasury and the Economic Secretary— this idea of having around one men who are fat only on certain occasions, for it is Antony who has the "lean and hungry look", and who is supposed to be the disciple of depression.
I hope the Financial Secretary will look very closely at this proposed new Clause, because while most of us who have spoken today have spoken on the basis of the experience of our own constituencics and the lack of employment in the parts of the country which we represent, this is, after all, in effect, a national problem. The manner in which the Government, from 1951, have neglected their duties and their opportunities in this matter has led to the situation in which we find ourselves today.
Between 1955 and 1959, about 340,000 new jobs were created in Britain, but only 20,000 of those jobs were found for the areas of high unemployment— the areas of Britain outside the Midlands and the London area. We are becoming a little despondent and dispirited at the repeated references to the figures that are given us, both for the regions in which we operate and the constituencies we represent, when we find that the figures promised fall far short when the performance is examined.
This new Clause gives a chance to the Financial Secretary and the Government to bring into operation some of the planning in which they now profess to believe. It suggests that they should have a look at the country as a whole and

at these problems as a whole, and decide that this unemployment problem is a social and human factor as well as a statistical one. It is absolutely wrong to talk about an affluent society and to use expressions of that description unless the Government are to translate their efforts to create employment into a reality.
There is another aspect of the problem with which I want to deal very briefly. There is a feeling in the areas where pit closures have been taking effect, in my own constituency and in other mining constituencies as well, that there is a reluctance at the moment on the part of the Government to attract alternative industries into these areas, because of the fact that they need miners in the expanding areas of the Midlands, Yorkshire and Nottinghamshire. I think that this shows a wrong sense of social values if this is the case.
I hope that not only will the Financial Secretary be able to accept the new Clause, but that he will be able to repudiate the outlook and the opinion which is growing very rapidly indeed; that is to say, that to bring new industry to the Blyth constituency, to Scotland and Northumberland, where pit closures are taking effect, is in some way to restrict the recruitment of miners in the flourishing mining areas of Britain. I hope that this will be repudiated, because it is precisely the areas of which I have spoken that are needing the type of assistance envisaged in this Clause. I make that appeal in this very brief form to the Financial Secretary at this stage.

Mr. W. Hamilton: It is a very grave commentary on the Government that they cannot muster their own supporters in a debate of this importance. We have had a debate lasting very nearly two hours— I am not quite sure when it started— and we have had one Scottish Conservative Member of Parliament present for rather less than half an hour. For the rest of the debate, we have not even had the presence, let alone the speeches, of Scottish hon. Members opposite. I mention the hon. Gentle. man the Member for Fife, East (Sir J. Gilmour), who has in his constituency at least two development districts, and who has not been here for a single minute, while these areas of East Fife


are crying out for new industry. They are without hope, their morale is lower than at any time I can remember, and they expect their own Member to support them, but he does not even attend the debate. The same applies to other hon. Gentlemen who pretend to represent Scottish divisions.
In debates of this kind, I try to anticipate what the Government's reply might be, always a hazardous operation, but in this case I think we can forecast reasonably accurately what the hon. Gentleman might say. He might, for instance, say that it is very difficult to operate a differential fiscal policy as between one region of the country and another. That might be one suggestion, or one loophole, for the Government— the administrative difficulties. Secondly, he might argue that the wording of the new Clauses is faulty and that they will not achieve what they set out to achieve. In other words, I rather gather that we will get a purely negative reply, in true Treasury style and spirit.
We have had one speech from the benches opposite from the hon. Member for Barry (Mr. Gower), who has just come back into the Chamber. He is in and out like a yo-yo in a horizontal direction. We can guarantee that, no matter what the case for the Government, he will support it. Sure enough, the hon. Gentleman got to his feet, as a loyal and dutiful supporter of the Government, and said that the Government are doing all they can. He said that we were knocking at an open door, that the Government were only too anxious to help, and that they had any amount of good intentions; but the road to hell is paved with them, and we in Scotland are not interested in the intentions of the Government. We are interested in their achievements. The hon. Gentleman must know that the morale of the Scottish people is at a very low ebb at this moment, and that they will register their protest, I have no doubt, in the West Lothian by-election very soon, when the Tory candidate there will be pleased to save his deposit.

7.30 p.m.

I start with a fundamental dislike of bribing private industry. One of the

arguments in favour of public ownership of an industry is that we do not have to do this. But we must consider the problem within the context of an economy which is predominantly a private enterprise economy, in which industry will not go of its own volition to areas like the Highlands of Scotland and other areas which are now scheduled as development districts. That being so, we must offer incentives of one kind or another.

There can be no denying that since the operation of the Local Employment Act something has been achieved in Scotland. We have never denied that. My hon. Friend the Member for Lanarkshire, North (Miss Herbison) has never denied it; nor has any Member representing a Scottish constituency. I repeat what I have said in the House before, that over the last five years Scotland has lost 85,000 jobs and has gained 50,000, in round figures. Scotland lost another 5,000 in the first few months of this year, and there is no doubt that she will lose many thousands more before the year is out.

A few weeks ago the Parliamentary Secretary to the Ministry of Labour visited Fife. After being taken on a conducted tour of the area, he said that in one small part of my constituency— the central West Fife area-5,000 new jobs were needed. Official figures issued by the Government indicate that the net gain in new jobs for the whole of Scotland in each of the two years of the operation of the Local Employment Act has been 5,000. In other words, each year the whole of Scotland has gained 5,000 jobs, just the number required in one small part of one constituency alone.

We have had discussions about the development of the motor car industry in Scotland. There is a little hope there. The jobs in the pipeline about which we hear so much are in connection with that industry. But it is very unlikely that this big industrial development will repeat itself year by year. We would welcome it if it were to do so, and we are anxious to do all we can to bring it about, but it is very unlikely.

The new Clauses suggest one way by which this process might be helped, and I hope that the Financial Secretary will not give the negative kind of reply that I have suggested, but will tell us what


the Government intend to do in addition to the provisions of the Local Employment Act, which are demonstrably inadequate to do the job that they are supposed to do.

Mr. Joseph Slater: We have listened to some very interesting speeches in this debate. My hon. Friend the Member for Fife, West (Mr. W. Hamilton) has expressed concern about the movement of population from Scotland. I would point out that hon. Members representing constituencies in Durham are also very concerned about this problem, which arises because of the lack of employment facilities. No one knows better than yourself, Sir Samuel, that there is a run-down in manpower in the mining industry of Durham. My constituency is seriously affected. The result is that my constituents art faced with two alternatives— either they must uproot themselves from the area in which they now live and go to the Midlands to find employment, or they must sign on the unemployment register. To my mind, this is a form of direction of people in one of our basic industries.
But there has been a movement of population in other parts of the county. This has left the greater part of the west side of the county minus those industries which could provide employment for the people who need it. That is why, together with other hon. Members representing the northern group of counties, I have been agitating for the President of the Board of Trade to give greater consideration to this area, in order to see whether there can be an extension of industry there.
My constituency is growing tremendously, and we are very concerned about the employment prospects for the younger generation leaving school. Not enough consideration is given to what will be the employment position for these young members of the population in a few years' time. The Government must take that point into account.
I now turn to the other side of my constituency— Tees-side. The unemployment figure for The Hartlepools, in March of this year, was 6·6 per cent. It has not improved since then. In Guisborough it was 9·7 per cent., and in Salt-burn it was 9·4 per cent. For the whole of Tees-side, which takes in the greater

part of the east side of my constituency, it was 4·5 per cent. Some people think that we are all right because I.C.I. is at Billingham and that that is the answer to all our employment problems. That is not so. At the moment 6,863 people are unemployed on Teas-side. There is a by-election in Middlesbrough tomorrow, and I hope that the people there will take note of the figures presented to the House today. I hope that the Minister will give an adequate reply to these figures. The number of people unemployed in Cleveland is 969, and in The Hartlepools 2,344. Taken with Teesside, this gives a total of 10,176. That is only for the Tees-side and The Hartle-pools.
The people of this area do not shout for employment alone. They realise their responsibilities not only to themselves but to their wives and Children. Many of us can look back to the time when we used to leave the pits and see long lines of men waiting at the colliery offices to see whether the management would be able to find them employment. People in the North-East are very disturbed about the situation. They are afraid that there may be a repetition of what they experienced in 1921 and 1926. As I said before in the House of Commons, we do not want to go back to those days. They belong to the past. The Government must accept their responsibility for the future of the people in our constituencies.

Mr. James Bennett: Much has been said about Scotland in this debate, and I make no apology for mentioning it again. In view of the extent of the problem in Scotland, which is being rapidly aggravated by pit closures and railway withdrawals, it is obvious that the contination of the Government's policy will ultimately lead to the whole of Scotland being a depressed area and being populated by a very depressed people. The ultimate result of such a policy is that people not merely will have lost faith in the Government but, more important still, will have lost faith in themselves.
We are told continuously that there are jobs in the pipeline. We all know that the pipeline has become a pipe-dream. The jobs in the pipeline would not deal with the wastage which is taking place today. It seems downright criminal


to keep people in idleness rather than to use their undoubted skills and energies which are in abundance in Scotland. These new Clauses do not profess to solve the problem, but their acceptance would go some way towards rekindling hope where hope has almost died.
Even on the question of overspill, which is bound up with the provision of industry, Glasgow is well behind in its programme. A measure such as this new Clause may provide the necessary stimulus and may speed up the removal of families from congested areas to places where there is guaranteed employment. I confess that I find it slightly ironical that the tenor of this debate has centred round growing unemployment in so many areas when we are constantly reminded that we are living in an affluent society. It may be affluent for some, but for far too many it is a time of worry and despair, a time when people tear up their roots and families divide in an effort to live in dignity and with some self-respect.
I sincerely hope that the Government will take note of the pleas which have been made from this side of the Committee, and will show some humanity in the problem which faces so many parts of this country.

The Financial Secretary to the Treasury (Sir Edward Boyle): The Committee, quite rightly, has been discussing this new Clause for about 2½ hours.

Mr. Callaghan: No.

Sir E. Boyle: Two and a quarter then. We have been discussing matters of great importance to hon. Members' constituencies, but as there is quite a lot of business to be done, perhaps the Committee will feel it possible to come to a conclusion on this matter fairly soon after I have sat down.
The hon. Member for Cardiff, South-East (Mr. Callaghan) introduced the new Clause with a most interesting speech. I agree entirely with what he said about the importance of regional planning. My right hon. Friend the Chief Secretary, who was here when the hon. Gentleman spoke but who, unfortunately, has had to leave for another engagement, would be the first to wish me to say how much he can sympathise with the hon. Gentleman's remarks about the importance of

having balanced economic development and not too high a concentration of economic development in the Midlands and South-East.

Mr. Sydney Silverman: And not Lancashire?

7.45 p.m.

Sir E. Boyle: I said that we should not have too much development in the Midlands and South-East compared with the rest of the country. That is obviously important from the social point of view and from the point of view of economic costs. Very few economists in this country have devoted much attention to the interesting question of comparative costs of production in various parts of the country.
I entirely agree with what hon. Members have said about the importance of the objective of creating new jobs in development areas and certainly— this is my third preliminary point— I would not rule out in principle the idea of making a more discriminatory use of our system of capital allowances. None the less, for a number of reasons which I will explain, I cannot advise the Committee to accept the two new Clauses. Hon. Members will not be surprised to hear me say that. However, I hope that I shall not take a purely negative line but will give some good reasons for thinking that, whereas the capital allowance, particularly the investment allowance, is an important aspect of our fiscal system, it is not well designed to create new jobs in development areas.
The investment allowance, which we had from 1954 to 1956 and which we have had again from 1959 onwards, is of particular value in dealing with an established industry which is carrying out an investment programme in a number of stages. That is particularly true of a large industry like the steel industry or the motor industry carrying out a continuing investment programme in phases. But I am doubtful, for a number of reasons which I shall give, just how effective the use of the investment allowance could be as a means of creating new jobs in development areas.
One point which strikes me straight away is that investment allowances confer their full benefit only where there are profits sufficient for them to be set against, and that is often not the case


with new or small firms. I think that it is generally recognised in the Committee that, where there is depopulation, it is a multiplicity of small projects rather than one very large project which are the most important. Do not let us forget that the cash benefit from the investment allowances follows the investment, so that it cannot usually help to finance it. The difficulty in a development area, to use a familiar phrase these days, is the difficulty of securing take-off. I am very doubtful whether the use of the investment allowance could ever be a good way of securing take-off in a development area.
There are, however, a number of other points. Investment allowances affect not only what I might call job-creating investment but other investment as well. The hon. Lady the Member for Lanarkshire, North (Miss Herbison), who made a particularly thoughtful speech, rightly talked a5out the problem of unemployment in her area. I hope that the Committee will not think that I am being flippant or that I am making a cheap debating point when I say that it may not be the best means to deal with unemployment to give a discriminatory investment allowance for labour-saving investment. The investment allowance would affect investment which would have been undertaken in any case.
There are one or two purely administrative points which are relevant to this proposal. First, there is the problem of what happens when an area is delisted. It is essential to the Government's plan for dealing with the problem of local unemployment that places should come on to and go off the list. It would not be to the advantage of the areas most affected if the same places were on the list all the time. It would probably be possible to do more for the areas most affected if fairly regular changes were made. But under this proposal it would obviously be more difficult because individual firms would not know where they stood. In the case of some area which is just on the fringe of being on the list, individual firms would not know what rate of investment allowance might be payable in six or nine months' time. I think that this proposal would result in a degree of uncertainty that would not be helpful to economic expansion.
The final administrative point is this. It is fair to say that the Inland Revenue

is not well equipped to ascertain the location of new investment. It is not just a problem here of discrimination, which I shall come to in a moment. I am making the point that the whole system of taxation is not equipped to give people capital allowances in accordance with the location of new items of investment. Therefore, for all the reasons I have given, I do not believe that the use of the investment allowance is well designed for creating new jobs in development areas, and I think that the administrative difficulties of the Opposition proposals would be very great indeed.
Coming to what we are actually doing now, I believe that the use by the Board of Trade of its powers under the Local Employment Act constitutes a superior means of dealing with local unemployment in a number of important respects. The first is that applications for assistance are considered absolutely on their merits, that is to say, in accordance with a strict principle of selectivity so that £ for £ far more can be achieved than could ever be achieved by some system of special tax assistance. I pointed out the disadvantages of the one method and I think it is fair to point out that the Government's own policy under the Local Employment Act results in what I believe to be a wisely discriminating approach to this question. I take the point made by the hon. Member for Anglesey (Mr. C. Hughes) about the delays, but that is inseparable from a well-designed selective approach. It is the essence of selection that if any system of selective assistance is to work well one must take trouble over how the selection is done.

Mr. Manuel: I indicated in my speech that we have quite large areas scheduled as development areas but that they have attracted no industry. For how many years is that to continue before the hon. Gentleman devises some method that will attract industry to these areas? Has he a completely closed mind and is he prepared to depopulate these areas completely of workers?

Sir E. Boyle: Depopulation and under-employment are a real social problem as well as the problem of unemployment with which in the past we have been unfortunately more familiar. But


what I suggested, and I suggest again, is that if our existing local employment procedures have not coped with that quite successfully, I am not convinced by anything that the hon. Member or other hon. Members have said that the use of the investment allowance would solve the problem.
Under the Local Employment Act the grants and loans provide help how and when it is needed. The administration is by a special department which has been charged with the responsibility of looking after these areas. I draw that contrast deliberately. Whereas our tax system is not equipped to ascertain the location of new investment, the whole administration of the Local Employment Act is precisely by a department which understands the problems of location very well, and one ought not to underestimate what has been achieved since the Act came into operation.
In the first two years of the operation of the Act, up to 31st March, 1962, the Board of Trade has offered assistance totalling £ 73·4 million for projects estimated to provide 75,000 new jobs. Of that total, £ 25·3 million was for factories or extensions to be built by the Board of Trade under Section 2 of the Act. In view of the number of Scottish Members who have spoken, I have looked particularly at the Scottish figures. Of the total assistance of £ 73·4 million, £ 43·8 million was spent in Scotland, and of the Section 2 total of £ 25·3 million for factories or extensions £ 13·5 million was spent in Scotland. I certainly recognise the very special problems of Scotland. I should like to assure those from Scotland who read this debate that, though I represent the Midlands and work in London, I am a fairly frequent visitor to Scotland and I fully realise the great difficulties in that country, not least where mines are being closed down. But it is fair to say that Scotland has had a reasonable share of offers made under the Act.
If one looks at the total amount of money spent in the Estimates, one finds that in 1960–61 the total amount spent on local employment policies was £ 11·8 million. In 1961–62 the total was £ 32·9 million— and hon. Members will remember that there was a big supplementary estimate at the end of last year— and of that total the outturn for Scotland was

£ 18·5 million. The estimated figure for the current financial year, 1962–63, is £ 41 million, of which £ 19 million will be spent in Scotland.

Miss Herbison: The hon. Gentleman has given most interesting figures, but I wonder whether, in looking at these figures, he found that the unemployment rate in Scotland at the moment, or the number who are unemployed, is far higher than it was this time last year. When the hon. Gentleman gives the proportion spent in Scotland, is he quite certain that sufficient is being spent altogether under the Local Employment Act? That is the point and not just the proportion which Scotland is taking of what is being spent. Is the amount spent sufficiently large to deal with this immense problem?

Sir E. Boyle: To take the hon. Lady's last point first, about the total amount being spent, obviously it is extremely difficult to answer that question with a "yes" or "no" straight away without looking at the figures carefully and at all the claims that are in. When the Local Employment Act was being debated early in this Parliament, I should have thought that if the House had known at that time that we were going to spend at the rate of a little over £ 40 million a year in two years, that would have been quite as much as the great majority of hon. Members on either side would have expected.
On the hon. Lady's point about local employment, I recognise the problem. This shows clearly how important it is that the resources of the Local Employment Act should be concentrated on creating new jobs in those areas where there is really a need, but I have given reasons to doubt whether the proposal in the first new Clause, to have a discriminatory investment allowance, is well designed to help development areas.
I have spoken for some time on the first Clause and I should like to say something about the other new Clause which has not been discussed at all since the original speech of the hon. Member for Cardiff, South-East. First, the hon. Member is quite right when he talks about the importance of capital investment to the economy. I have no doubt that that is exactly one of the subjects


which the N.E.D.C. will be considering, now that it is doting its study of the implications of a 4 per cent. growth rate for the country over five years. There will no doubt be a good dead of industry by industry study as well. One ought not to underrate the extent to which fixed investment by manufacturing industry alone hats gone up in recent years.
I should like to repeat some figures which I quoted in my speech in the Budget debate. In 1961 it was 20 per cent. higher than in 1960, 40 per cent. higher than in 1959, and about 70 per cent. higher than in 1951. I agree that there will be some fall in 1962 but, even so, by the end of the year it should be higher than it was in 1960. I think that the hon. Member for Cardiff, South-East will grant that it is particularly difficult in the case of fixed investments to have a steady gradation over the years, because there are particular industries which invest a good deal whose peaks of expenditure came in different years. I agree that the very high figure for the last year was broadly the result of a considerable burst of investment in steel and it would not be reasonable to expect that rate of investment to continue at exactly the same figure over a period of years.

8.0 p.m.

Naturally, we shall take into account all that is told us by the N.E.D.C. and all that we can learn from the general progress of the economy when considering what the future of the capital allowances should be. But, here again, I must put what seem to me to be certain real objections to the suggestion behind the second new Clause— Increase of investment allowances for investment in industries of special national importance. I last replied to a new Clause on these lines in 1956. I shall endeavour not to make the same speech again, but some of the arguments inevitably must recur.

The new Clause defines special national importance under three heads; first, investment to increase exports and save imports; second, investment to promote technical development; third, investment to promote better use of the national resources.

Investment allowances designed to increase exports and save imports encounter this difficulty. First, on the export side, this is just the sort of thing

which is contrary to our international obligations and against which the F.B.I. Report recommended. A discriminatory investment allowance designed to promote exports would not be in accordance with our international obligations.

On the import saving side, I think that the hon. Member for Cardiff, South-East realises all the difficulties. This is a fairly inclusive category. I think that investment for agriculture, for instance, would come under this head. I am quite prepared to go this far with Scottish Members, that I myself would prefer at any time an increase of investment for Scotland financed above the line in the Budget rather than have what would, in effect, be a blanket provision to give special discrimination in favour of all agricultural investment in this country, which would not, I think, be justified.

I came now to the second head, the promotion of technical development. Again, the meaning seems to be fairly vague. I think it worth remembering here that much of the total of Government expenditure on research and development, altogether £ 315 million, is of direct benefit to industry; £ 228 million spent through the Ministry of Aviation and £ 20 million through the D.S.I.R. There are 52 research associations grant-aided by the D.S.I.R. In my view, it is very arguable that that is the way to help technical development rather than by giving a discriminatory allowance.

As regards the last category, the promotion of better use of national resources, I should not envy any Government, Commissioners of Inland Revenue or anyone else who had the administrative problem of practising this sort of discrimination. I think that the hon. Gentleman fully realises the difficulties which would be involved in so general a term as that.

Hon. Members will, I believe, appreciate the difficulties inherent in the second new Clause. I appreciate the importance which all hon. Members who have spoken attach to local employment policies and the social and economic problems which they have raised regarding development districts. I have explained why I do not think that the Committee should accept these two new Clauses, but, equally, I assure the Committee that we do attach real importance


to regional planning and ensuring balanced economic development throughout the country. This is partly a matter of influencing that sector of the economy where the Government have direct control, and partly a matter, I agree, of the relations between the Government and private industry.

Hon. Members should realise that if they want to achieve a high growth rate steadily, year by year, this cannot be done by putting too much pressure on private industry. I well remember what one hon. Member for whom I had a profound respect, the late Sir Peter Bennett, later Lord Bennett of Edgbaston, said to me. He told me of the problems faced by businessmen who had made a success of their undertakings, who really were contributing to the national welfare, when they had suddenly to increase their average costs of production in falling in with the Government's employment policy. This is not an easy matter. It must be a matter for co-operation between Government and industry.

If I advise the Committee, as I do, to reject the new Clauses, I do so not because I am unsympathetic to much of what hon. Members have said but because I think that we have to realise both the limitations of our tax system and the fact that we can achieve economic progress only by co-operation between the Government and the whole of industry.

Mr. Houghton: We on these benches make no apology for taking up the time of the Committee, even for two and a half hours, on these important new Clauses. With great respect to some of the business which is to follow, we think that this matter has a prior claim upon the time of the Committee, a greater claim than tax relief on medical expenses, on school fees, and matters of that kind. Therefore, even though we have held up progress on the Bill for a little time, we feel that this has been fully justified.
I am, I think, entitled to join in the criticism of the poor attendance of hon. Members opposite and the complete absence for all the debate of the Liberal Party. Those who claim the confidence and support of the electorate today

should at least put in an appearance when matters pertaining to the interests of the electorate are being discussed. It is not too late for the electorate of Middlesbrough to take note of the callous indifference of hon. Members on the benches opposite and on the Liberal bench today.
The Financial Secretary has courteously listened to many speeches from my hon. Friends. They have been thoughtful, constructive and moving speeches on problems of intense local interest and importance. I associate myself with my hon. Friend the Member for Dunfermline Burghs (Dr. A. Thompson), who urged that we should sometimes look away from national figures, national averages and the overall state of the economy and examine a little more closely what is happening in particular areas where there may be decline, decay, loss of morale, and unemployment.
The Financial Secretary has heard very little, perhaps, about tax reliefs, but he has heard a good deal -about localities where all is not well with the people. It seems that the hon. Gentleman is with us on aims but he has laid all the traps for us on means, describing in great detail some of the difficulties we are up against. On the general proposition of the need for balanced economic development, the Financial Secretary agrees with our purpose.
I am sure that the whole Committee will agree that it is fantastic how we in this country are now crowding into the south-east of England and into the west Midlands, pressing upon transport, housing and services of all kinds. The conditions in which many thousands of people travel to and from work in the London area today are absolutely disgraceful. They are certainly undignified, if not positively indecent. This is something of which any Government should take immediate note. We have traffic congestion, street parking, and the strangulation of a whole city to witness every day. The price of property is soaring. Rents are high. Those who come to London find a very big difference in their standard of living.
According to the Government, there are, apparently, two remedies for this problem when more and more jobs are being created in some areas and there is


a net loss of jobs in other parts of the country. The first is the Local Employment Act, 1960, of which we have heard a good deal. The other is the system of industrial development certificates established under earlier distribution of industry legislation. In our view, the first new Claruse— Increase of investment allowances for expenditure in development districts— would reinforce the Local Employment Act, and the second new Clause—Increase of investment allowances for investment in industries of special national importance— would reinforce the system of granting industrial development certificates. We must remember the fact that the Local Employment Act operates only in relation to a high and persistent level of unemployment. This problem goes far beyond that, important though that is. There are areas outside the scope of the Local Employment Act at present which are nevertheless in a stagnant condition, where a gradual decline has already set in and where, unless the trend is reversed, the terms of the Act will eventually apply.
My hon. Friends have mentioned many areas which they know well. We have heard of the special problems of Scotland, of Wales, of Northern Ireland and of the north-east corner of England. They are areas with special problems more acute than elsewhere. Nevertheless, there are towns— I have one in my constituency, Todmorden, and I hope I shall be forgiven for mentioning it— which are afflicted by, for example, the blight of the declining cotton textile industry. Todmorden is hovering on the 4 per cent. unemployment level. It is not a high level, or, at least, it is not persistent enough to be brought within the scope of the Local Employment Act, yet there are the first signs of social, industrial and municipal decline. The young people are leaving. The proportion of old-age pensioners is greater than usual.
If the thriving industrial towns of the past are to become derelict and neglected, left to the parents, the grandparents and the aged, there is something very unhealthy in the distribution of industry and of the population. The whole country cannot be in a healthy social and economic condition so long as affluence is created only in two monstrous areas where, if conditions go

unchecked, affluence itself will be in danger. Municipal enterprise in the declining towns of which we have spoken is threatened by loss of rateable value, and all the disheartening conditions which we know so well are to be found there.
The new Clauses are intended to provide inducements. I say at once that inducement will not, in my view, he enough. The Government will have to take a firmer hand in organising the distribution of industry in this country. The fate of communities must not be left to the caprice of private industry, not even of the National Coal Board. There must be some Government oversight of how the health of the nation is being promoted in these areas. But, dealing with the matter in the context of the present economic and political situation, these new Clauses are intended to offer an additional incentive to industry to go to particular areas.
The Financial Secretary agrees that the intention is good, but he tells us, of course, that there are difficulties. Will the new Clauses achieve our aim? I am as conscious as anyone of the problem of the Inland Revenue in deciding what is an industry of special national importance and dealing with discriminatory investment allowances of this kind. It was not our intention that the matter should rest with the Inland Revenue. Under the second new Clause, for instance, we contemplated that a certificate would be given by the very Department which the Financial Secretary says is in close touch with the needs of particular areas. When the certificate was given, the Inland Revenue would make the necessary capital allowance. I know that even so this has problems of uncertainty and difficulty of definition, which the Financial Secretary mentioned. But there is uncertainty at present in the administration of the Local Employment Act. One month you are in, and another month you are out. There are difficulties about attracting new industries when they are not certain that when they have made their decisions the facilities will be open to them.

8.15 p.m.

The problem we are always up against on these matters is this. We make proposals, we try to help, and we have a purpose which we pursue the whole


time. What we get from right hon. and hon. Members opposite is nothing but a recital of all the difficulties in the way of what we want to do. Will they ever produce something of their own? They have had all this time to work something out for themselves, but now the alibi is the National Economic Development Council. That is the magic box out of which all the solutions are to come.

Could not the Government anticipate the National Economic Development Council by a few months on some matters? Cannot they show some initiative of their own? Has the country put its fate in the hands of the Council? Are the Government just waiting for something to come out of it? Important as the Council is, it does not relieve the Government of their responsibilities.

We are as conscious as anyone of the potential of the Council, but that does not discourage us from putting forward proposals which we wish to see operated, probably much earlier than any recommendations of the Council.

We are disappointed with what the Financial Secretary said. We acknowledge the work which the Local Employment Act is doing. The first new Clause would reinforce that. The second new Clause would make provision for investment of special importance outside the Local Employment Act areas, which may be just as important. On all these grounds we feel that we must register our dissatisfaction with the Government's reply.

Question put, That the Clause be read a Second time:—

The Committee divided Ayes 165, Noes 221.

Division No. 214.]
AYES
[8.17 p.m.


Abse, Leo
Hall, Rt. Hn. Glenvil (Colne Valley)
Noel-Baker,Rt.Hn.Philip(Derby,S.)


Allaun, Frank (Salford, E.)
Hamilton, William (West Fife)
Oram, A. E.


Allen, Scholefield (Crewe)
Harper, Joseph
Oswald, Thomas


Awbery, Stan
Hart, Mrs. Judith
Owen, Will


Bacon, Miss Alice
Hayman, F. H.
Padley, W. E.


Baxter, William (Stirlingshire, W.)
Henderson, Rt.Hn.Arthur(RwlyRegis)
Pannell, Charles (Leeds, W.)


Beaney, Alan
Herbison, Miss Margaret
Parker, John


Bellenger, Rt. Hon. F. J.
Holman, Percy
Paton, John


Bennett, J. (Glasgow, Bridgeton)
Holt, Arthur
Pearson, Arthur (Pontypridd)


Benson, Sir George
Hooson, H. E.
Peart, Frederick


Blackburn, F.
Houghton, Douglas
Pentland, Norman


Blyton, William
Howell, Charles A. (Perry Barr)
Plummer, Sir Leslie


Boardman, H.
Howell, Denis (Small Heath)
Popplewell, Ernest


Bowden, Rt. Hn. H. W. (Leics.S.W.)
Hughes, Emrys (S. Ayrshire)
Prentice, R. E.


Bowles, Frank
Hughes, Hector (Aberdeen, N.)
Price, J. T. (Westhoughton)


Boyden, James
Hunter, A. E.
Proctor, W. T.


Brockway, A. Fenner
Hynd H. (Accrington)
Pursey, Cmdr. Harry


Broughton, Dr. A. D. D.
Hynd, John (Attercllffe)
Randall, Harry


Butler, Herbert (Hackney, S.)
Irving, Sydney (Dartford)
Rankin, John


Callaghan, James
Jeger, George
Redhead, E. C.


Castle, Mrs. Barbara
Jones, Dan (Burnley)
Rhodes, H.


Chapman, Donald
Jones, Elwyn (West Ham, S.)
Roberts, Albert (Normanton)


Collick, Percy
Jones, Jack (Rotherham)
Roberts, Goronwy (Caernarvon)


Corbet, Mrs. Freda
Kelley, Richard
Robertson, John (Paisley)


Craddock, George (Bradford, S.)
Kenyon, Clifford
Ross, William


Cronin, John
Key, Rt. Hon. C. W.
Royle, Charles (Salford, West)


Crosland, Anthony
King, Dr. Horace
Shinwell, Rt. Hon. E.


Darling, George
Lawson, George
Short, Edward


Davies, G. Elfed (Rhondda, E.)
Lee, Miss Jennie (Cannock)
Silverman, Julius (Aston)


Davies, Harold (Leek)
Lever, L. M. (Ardwick)
Silverman, Sydney (Nelson)


Davies, S. O. (Merthyr)
Lubbock, Eric
Slater, Mrs. Harriet (Stoke, N.)


Deer, George
Mabon, Dr. J. Dickson
Slater, Joseph (Sedgefleld)


Delargy, Hugh
McCann, John
Smith, Ellis (Stoke, S.)


Dodds, Norman
MacDermot, Niall
Snow, Julian


Dugdale, Rt. Hon. John
Mclnnes, James
Sorensen, R. W.


Ede, Rt. Hon. C.
McKay, John (Wallsend)
Soskice, Rt. Hon. Sir Frank


Edwards, Rt. Hon. Ness (Caerphilly)
MacMillan, Malcolm (Western Isles)
Spriggs, Leslie


Edwards, Walter (Stepney)
MacPherson, Malcolm (Stirling)
Steele, Thomas


Evans, Albert
Mallalieu, J.P.W. (Huddersfield.E.)
Stewart, Michael (Fulham)


Finch, Harold
Manuel, Archie
Stones, William


Fletcher, Eric
Mapp, Charles
Strachey, Rt. Hon. John


Foot, Michael (Ebbw Vale)
Marsh, Richard
Swingler, Stephen


Forman, J. C.
Mason, Roy
Taylor, Bernard (Mansfield)


Fraser, Thomas (Hamilton)
Mellish, R. J.
Thomas, George (Cardiff, W.)


Galpern, Sir Myer
Mendelson, J. J.
Thomas, Iorwerth (Rhondda, W.)


Ginsburg, David
Milne, Edward
Thompson, Dr. Alan (Dunfermline)


Gooch, E. G.
Morris, John
Thomson, G. M. (Dundee, E.)


Gordon Walker, Rt. Hon. P. C.
Moyle, Arthur
Thornton, Ernest


Greenwood, Anthony
Mulley, Frederick
Wade, Donald


Grimond, Rt. Hon. J.
Neal, Harold
Wainwright, Edwin




Warbey, William
Willey, Frederick
Woof, Robert


Weitzman, David
Williams, D. J. (Neath)
Yates, Victor (Ladywood)


Wells, Percy (Favereham)
Williams, LI. (Abertillery)
Zilllacus, K.


White, Mrs. Elrene
Williams, W. T. (Warrington)



Whitlock, William
Willis, E. G. (Edinburgh, E.)
TELLERS FOR THE AYES:


Wilkins, W. A.
Winterbottom, R. E.
Mr. Grey and Mr. Ifor Davies.




NOES


Agnew, Sir Peter
Gresham Cooke, R.
Osborne, Sir Cyril (Louth)


Aitken, W. T.
Grosvenor, Lt.-Col. R. G.
Page, Graham (Crosby)


Allason, James
Gurden, Harold
Page, John (Harrow, West)


Arbuthnot, John
Hall, John (Wycombe)
Pannell, Norman (Kirkdale)


Ashton, Sir Hubert
Hamilton, Michael (Wellingborough)
Partridge, E.


Atkins, Humphrey
Harrison, Brian (Maldon)
Pearson, Frank (Clitheroe)


Balniel, Lord
Harrison, Col. Sir Harwood (Eye)
Percival, Ian


Barber, Anthony
Harvey, John (Walthamstow, E.)
Pickthorn, Sir Kenneth


Batsford, Brian
Hastings, Stephen
Pike, Miss Mervyn


Beamish, Col. Sir Tufton
Hay, John
Pitt, Miss Edith


Berkeley, Humphry
Heald, Rt. Hon. Sir Lionel
Pott, Percivall


Bidgood, John C.
Henderson, John (Cathcart)
Price, David (Eastleigh)


Biffen, John
Hicks Beach, Maj. W.
Profumo, Rt. Hon. John


Biggs-Davison, John
Hiley, Joseph
Proudfoot, Wilfred


Bishop, F. P.
Hirst, Geoffrey
Quennell, Miss J. M.


Black, Sir Cyril
Hobson, Sir John
Redmayne, Rt. Hon. Martin


Bossom, Clive
Holland, Philip
Rees, Hugh


Bourne-Arton, A.
Hollingworth, John
Rees-Davies, W. R.


Box, Donald
Hopkins, Alan
Renton, David


Boyd-Carpenter, Rt. Hon. John
Hornby, R. P.
Ridsdale, Julian


Boyle, Sir Edward
Hornsby-Smith, Rt. Hon. Dame P.
Roberts, Sir Peter (Heeley)


Braine, Bernard
Howard, John (Southampton, Test)
Robinson, Rt. Hn. Sir R. (B'pool, S).


Brooman-White, R.
Hughes Hallett, Vice-Admiral John
Roots, William


Brown, Alan (Tottenham)
Hughes-Young, Michael
Ropner, Col, Sir Leonard


Browne, Percy (Torrington)
Hulbert, Sir Norman
Seymour, Leslie


Bullard, Denys
Hurd, Sir Anthony
Sharples, Richard


Bullus, Wing Commander Eric
Hutchison, Michael Clark
Shaw, M.


Butcher, Sir Herbert
Iremonger, T. L.
Shepherd, William


Campbell, Gordon (Moray &amp; Nairn)
Irvine, Bryant Godman (Rye)
Skeet, T. H. H.


Cary, Sir Robert
Jennings, J. C.
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Chataway, Christopher
Johnson Dr. Donald (Carlisle)
Smithers, Peter


Chichester-Clark, R.
Johnson, Eric (Blackley)
Smyth, Brig. Sir John (Norwood)


Cleaver, Leonard
Johnson Smith, Geoffrey
Spearman, Sir Alexander


Cole, Norman
Jones, Rt. Hn. Aubrey (Hall Green)
Speir, Rupert


Collard, Richard
Joseph, Sir Keith
Stanley, Hon. Richard


Cooke, Robert
Kaberry, Sir Donald
Stevens, Geoffrey


Cooper, A. E.
Kerr, Sir Hamilton
Steward, Harold (Stockport, S.)


Cordeaux, Lt.-Col. J. K.
Kitson, Timothy
Stoddart-Scott, Col. Sir Malcolm


Corfield, F. V.
Lagden, Godfrey
Summers, Sir Spencer


Costain, A. P.
Langford-Holt, Sir John
Talbot, John E.


Coulson, Michael
Leather, E. H. C.
Tapsell, Peter


Courtney, Cdr. Anthony
Leavey, J. A.
Taylor, Sir Charles (Eastbourne)


Critchley, Julian
Leburn, Gilmour
Taylor, Edwin (Bolton, E.)


Crosthwaite-Eyre, Col. Sir Oliver
Legge-Bourke, Sir Harry
Taylor, Frank (M'ch'st'r, Moss Side)


Cunningham, Knox
Lewis, Kenneth (Rutland)
Teellng, Sir William


Curran, Charles
Linstead, Sir Hugh
Temple, John M.


Currie, G. B. H.
Litchfield, Capt. John
Thatcher, Mrs. Margaret


Deedes, W. F.
Lloyd, Rt. Hon. Selwyn (Wirral)
Thomas, Leslie (Canterbury)


de Ferranti, Basil
Longbottom, Charles
Thornton-Kemsley, Sir Colin


Digby, Simon Wingfield
Longden, Gilbert
Tilney, John (Wavertree)


Doughty, Charles
Loveys, Walter H.
Touche, Rt. Hon. Sir Gordon


Drayson, G. B.
Lucas-Tooth, Sir Hugh
Turner, Colin


du Cann, Edward
McAdden, Stephen
Turton, Rt. Hon. R. H.


Duncan, Sir James
MacArthur, Ian
van Straubenzee, W. R.


Eden, John
McMaster, Stanley R.
Vickers, Miss Joan


Elliot, Capt. Walter (Carshalton)
Maddan, Martin
Vosper, Rt. Hon. Dennis


Emery, Peter
Maginnis, John E.
Wakefield, Sir Wavell


Emmet, Hon. Mrs. Evelyn
Markham, Major Sir Frank
Walder, David


Errington, Sir Eric
Marlowe, Anthony
Walker-Smith, Rt. Hon. Sir Derek


Farey-Jones, F. W.
Marshall, Douglas
Ward, Dame Irene


Farr, John
Marten, Neil
Wells, John (Maidstone)


Fell, Anthony
Matthews, Gordon (Meriden)
Whitelaw, William


Finlay, Graeme
Mawby, Ray
Williams, Dudley (Exeter)


Fletcher-Cooke, Charles
Maxwell-Hyslop, R. J.
Williams, Paul (Sunderland, S.)


Forrest, George
Maydon, Lt.-Cmdr. S. L. C.
Wills, Sir Gerald (Bridgwater)


Freeth, Denzil
Mills, Stratton
Wilson, Geoffrey (Truro)


Gammans, Lady
More, Jasper (Ludlow)
Wise, A. R.


Gibson-Watt, David
Morgan, William
Wood, Rt. Hon. Richard


Glover, Sir Douglas
Morrison, John
Woodnutt, Mark


Glyn, Dr. Alan (Clapham)
Nicholson, Sir Godfrey
Worsley, Marcus


Goodhew, Victor
Noble, Michael
Yates, William (The Wrekin)


Gower, Raymond
Nugent, Rt. Hon. Sir Richard



Grant, Rt. Hon. William
Oakshott, Sir Hendrie
TELLERS FOR THE NOES:


Grant-Ferris, Wg. Cdr. R.
Orr, Capt. L. P. S.
Mr. McLaren and Mr. Ian Fraser.


Green, Alan
Osborn, John (Hallam)

New Clause.— (INCREASE OF INVESTMENT ALLOWANCES FOR INVESTMENT IN INDUSTRIES OF SPECIAL NATIONAL IMPORTANCE.)

(1) In relation to expenditure incurred—
(a) on industrial buildings or structures, or on machinery or plant, in any industry prescribed as of special national importance; or
(b) on machinery or plant of any description prescribed as of special national importance:
subsections (2) to (5) of section sixteen of the Finance Act, 1954 (which provide for making investment allowances in respect of capital expenditure on certain new assets), shall have effect with the substitution of references to one-fifth and one-tenth (being the proportions of expenditure governing investment allow-

ances) of references respectively to three-tenths and three-twentieths.

(2) For the purposes of the last foregoing subsection an industry or a description of machinery or plant shall be prescribed as of special national importance, if, and only if, the produce of that industry or the use of machinery or plant of that description is of special value in increasing exports, saving imports or promoting technical development or the bettor use of national resources.— [Mr. Callaghan.]

Brought up, and read the First time.

Motion made, and Question put, That the Clause be read a Second time: —

The Committee divided: Ayes 165, Noes 226.

Division No. 215.]
AYES
[8.27 p.m.


Abse, Leo
Hayman, F. H.
Plummer, Sir Leslie


Allaun, Frank (Salford, E.)
Henderson,Rt.Hn.Arthur(RwlyRegls)
Popplewell, Ernest


Allen, Scholefield (Crewe)
Herbison, Miss Margaret
Prentice, R. E.


Awbery, Stan
Holman, Percy
Price, J. T. (Westhoughton)


Bacon, Miss Alice
Holt, Arthur
Proctor, W. T.


Baxter, William (Stirlingshire, W.)
Hooson, H. E.
Pursey, Cmdr. Harry


Beaney, Alan
Houghton, Douglas
Randall, Harry


Bellenger, Rt. Hon. F. J.
Howell, Denis (Small Heath)
Rankin, John


Bennett, J. (Glasgow, Bridgeton)
Hughes, Cledwyn (Anglesey)
Redhead, E. C.


Benson, Sir George
Hughes, Emrys (S. Ayrshire)
Rhodes, H.


Blackburn, F.
Hughes, Hector (Aberdeen, N.)
Roberts, Albert (Normanton)


Blyton, William
Hunter, A. E.
Roberts, Goronwy (Caernarvon)


Boardman, H.
Hynd, H. (Accrington)
Robertson, John (Paisley)


Bowden, Rt. Hn. H.W. (Leics. S.W.)
Hynd, John (Attercliffe)
Ross, William


Bowles, Frank
Irving, Sydney (Dartford)
Royle, Charles (Salford, West)


Boyden, James
Jeger, George
Shinwell, Rt. Hon. E.


Brockway, A. Fenner
Jones, Dan (Burnley)
Short, Edward


Broughton, Dr. A. D. D.
Jones, Elwyn (West Ham, S.)
Silverman, Julius (Aston)


Butler, Herbert (Hackney, C.)
Jones, Jack (Rotherham)
Slater, Mrs. Harriet (Stoke, N.)


Callaghan, James
Kelley, Richard
Slater, Joseph (Sedgefield)


Castle, Mrs. Barbara
Kenyon, Clifford
Smith, Ellis (Stoke, S.)


Chapman, Donald
Key, Rt. Hon. C. W.
Snow, Julian


Collick, Percy
King, Dr. Horace
Sorensen, R. W.


Corbet, Mrs. Freda
Lawson, George
Soskice, Rt. Hon. Sir Frank


Craddock, George (Bradford, S.)
Lee, Miss Jennie (Cannock)
Spriggs, Leslie


Cronin, John
Lever, L. M. (Ardwick)
Steele, Thomas


Crosland, Anthony
Lubbock, Eric
Stewart, Michael (Fulham)


Darling, George
Mabon, Dr. J. Dickson
Stones, William


Davies, G. Elfed (Rhondda, E.)
MacDermoi, Niall
Strachey, Rt. Hon. John


Davies, Harold (Leek)
Mclnnes, James
Swingler, Stephen


Davies, Ifor (Cower)
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Davies, S. O. (Merthyr)
MacMillan, Malcolm (Western Isles)
Thomas, George (Cardiff, W.)


Deer, George
MacPherson, Malcolm (Stirling)
Thomas, lorwerth (Rhondda, W.)


Delargy, Hugh
Mallalleu, J.P.W. (Huddersfield, E.)
Thompson, Dr. Alan (Dunfermline)


Dodds, Norman
Manuel, Archie
Thomson, G. M. (Dundee E.)


Dugdale, Rt. Hon. John
Mapp, Charles
Thornton, Ernest


Ede, Rt. Hon. C.
Marsh, Richard
Wade, Donald


Edwards, Rt. Hon. Ness (Caerphilly)
Mason, Roy
Wainwright, Edwin


Edwards, Walter (Stepney)
Melllsh, R. J.
Warbey, William


Evans, Albert
Mendelson, J. J.
Weitzman, David


Finch, Harold
Milne, Edward
Wells, Percy (Faversham)


Fletcher, Eric
Morris, John
White, Mrs. Eirene


Foot, Michael (Ebbw Vale)
Moyle, Arthur
Whitlock, William


Forman, J. C.
Mulley, Frederick
Wllkins, W. A.


Fraser, Thomas (Hamilton)
Neal, Harold
Willey, Frederick


Galpern, Sir Myer
Noel-Baker,Rt.Hn.PhllipCDerby,S.)
Williams, D. J. (Neath)


Glnsburg, David
Oram, A. E.
Williams, LI. (Abertillery)


Gooch, E. G.
Oswald, Thomas
Williams, W. T. (Warrington)


Gordon Walker, Rt. Hon. P. C.
Owen, Will
Willis, E. G. (Edinburgh, E.)


Greenwood, Anthony
Padley, W. E.
Winterbottom, R. E.


Grey, Charles
Pannell, Charles (Leeds, W.)
Woof, Robert


Grimond, Rt. Hon. J.
Parker, John
Yates, Victor (Ladywood)


Hall, Rt. Hn. Gienvll (Colne Valley)
Paton, John
Zllliacus, K.


Hamilton, William (west Fife)
Pearson, Arthur (Pontypridd)



Harper, Joseph
Peart, Frederick
TELLERS FOR THE AYES:


Hart, Mrs. Judith
Pentland, Norman
Mr. Charles A. Howell and




Mr. McCann




NOES


Agnew, Sir Peter
Gresham Cooke, R.
Osborn, John (Haliam)


Aitken, W. T.
Grosvenor, Lt.-Col. R. G.
Osborne, Sir Cyril (Louth)


Allason, James
Gurden, Harold
Page, Graham (Crosby)


Arbuthnot, John
Hall, John (Wycombe)
Page, John (Harrow, West)


Ashton, Sir Hubert
Hamilton, Michael (Wellingborough)
Pannell, Norman (Kirkdale)


Atkins, Humphrey
Harris, Reader (Heston)
Partridge, E.


Balniel, Lord
Harrison, Brian (Maldon)
Pearson, Frank (Clitheroe)


Barber, Anthony
Harrison, Col. Sir Harwood (Eye)
Percival, Ian


Barlow, Sir John
Harvey, John (Walthamstow, E.)
Pickthorn, Sir Kenneth


Batsford, Brian
Hastings, Stephen
Pike, Miss Mervyn


Baxter, Sir Beverley (Southgate)
Hay, John
Pitt, Miss Edith


Beamish, Col. Sir Tufton
Heald, Rt. Hon. Sir Lionel
Pott, Percivall


Berkeley, Humphry
Henderson, John (Cathcart)
Price, David (Eastlelgh)


Bidgood, John C.
Hicks Beach, MaJ. W.
Profumo, Rt. Hon. John


Biffen, John
Hlley Joseph
Proudfoot, Wilfred


Biggs-Davison, John
Hirst, Geoffrey
Quennell, Miss J. M.


Bishop, F. P.
Hobson, Sir John
Redmayne, Rt. Hon. Martin


Black, Sir Cyril
Holland, Philip
Rees, Hugh


Bossom, dive
Hollingworth, John
Rees-Davles, W. R.


Bourne-Arton, A.
Hopkins, Alan
Renton, David


Box, Donald
Hornby, R, P.
Rldsdaie, Julian


Boyd-Carpenter, Rt. Hon. John
Hornsby-Smith, Rt. Hon. Dame P.
Roberts, Sir Peter (Heeley)


Boyle, Sir Edward
Howard, John (Southampton, Test)
Robinson, Rt. Hn. Sir R. (B'pool, S.)


Bralne, Bernard
Hughes Hallett, Vice-Admira! John
Roots, William


Brewis, John
Hughes-Young, Michael
Ropner, Col. Sir Leonard


Brooman-White, R.
Hulbert, Sir Norman
Seymour, Leslie


Brown, Alan (Tottenham)
Hurd, Sir Anthony
Sharples, Richard


Browne, Percy (Torrington)
Hutchison, Michael Clark
Shaw, M.


Bullard, Denys
Iremonger, T. L.
Shepherd, William


Bullus, Wing Commander Eric
Irvine, Bryant Godman (Rye)
Skeet, T. H. H.


Butcher, Sir Herbert
Jennings, J. C.
Smith, Dudley (Br'ntf'd &amp; Chlswick)


Campbell, Gordon (Moray &amp; Nairn)
Johnson, Dr. Donald (Carlisle)
Smithers, Peter


Cary, Sir Robert
Johnson, Eric (Blacktey)
Smyth, Brig. Sir John (Norwood)


Chataway, Christopher
Johnson Smith, Geoffrey
Spearman, Sir Alexander


Cleaver, Leonard
Jones, Rt. Hn. Aubrey (Hall Green)
Speir, Rupert


Cole, Norman
Joseph, Sir Keith
Stanley, Hon. Richard


Collard, Richard
Kaberry, Sir Donald
Stevens, Geoffrey


Cooke, Robert
Kerr, Sir Hamilton
Steward, Harold (Stockport, S.)


Cooper, A. E.
Kitson, Timothy
Stoddart-Scott, Col. Sir Malcolm


Cordeaux, Lt.-Col. J. K.
Lagden, Godfrey
Summers, Sir Spencer


Corfleld, F. -V.
Langford-Holt, Sir John
Talbot, John E.


Costain, A. P.
Leather, E. H. C.
Tapsell, Peter


Coulson, Michael
Leavey, J. A.
Taylor, Sir Charles (Eastbourne)


Courtney, Cdr. Anthony
Leburn, Gilmour
Taylor, Edwin (Bolton, E.)


Crltchley, Julian
Legge-Bourke, Sir Harry
Taylor, Frank (M'ch'st'r, Moss Side)


Crosthwalte-Eyre, Col. Sir Oliver
Lewis, Kenneth (Rutland)
Teeling, Sir William


Cunningham, Knox
Llnstead, Sir Hugh
Temple, John M.


Curran, Charles
Litchfield, Capt. John
Thatcher, Mrs. Margaret


Currie, G. B. H.
Lloyd, Rt. Hon. Selwyn (Wirral)
Thomas, Leslie (Canterbury)


Deedes, W. F.
Longbottom, Charles
Thornton-Kemsley, Sir Colin


de Ferrantl, Basil
Longden, Gilbert
Tilney, John (Wavertree)


Digby, Simon Wingfield
Loveys, Walter H.
Touche, Rt. Hon. Sir Gordon


Doughty, Charles
Lucas-Tooth, Sir Hugh
Turner, Colin


Drayton, G. B.
McAdden, Stephen
Turton, Rt. Hon. R. H.


du Cann, Edward
MacArthur, Ian
van Straubenzee, W. R.


Duncan, Sir James
McLaren, Martin
Vickers, Miss Joan


Eden, John
McLean, Neil (Inverness)
Vosper, Rt. Hon. Dennis


Elliot, Capt. Walter (Carshalton)
McMaster, Stanley R.
Wakefield, Sir Wavell


Emery, Peter
Maddan, Martin
Walder, David


Emmet, Hon. Mrs. Evelyn
Maginnis, John E.
Walker-Smith, Rt. Hon. Sir Derek


Errlngton, Sir Eric
Markham, Major 8lr Frank
Ward, Dame Irene


Farey-Jones, F. W.
Marlowe, Anthony
Wells, John (Maidstone)


Farr, John
Marshall, Douglas
Whitelaw, William


Fell, Anthony
Marten, Nell
Williams, Dudley (Exeter)


Flnlay, Graeme
Matthews, Gordon (Meriden)
Williams, Paul (Sunderland, S.)


Fletcher-Cooke, Charles
Mawby, Ray
Wills, Sir Gerald (Bridgewater)


Forrest, George
Maxwell-Hyslop, R. J.
Wilson, Geoffrey (Truro)


Freeth, Denzll
Maydon, Lt.-Cmdr. S. L. C.
Wise, A. R.


Gammans, Lady
Mills, Stratton
Wood, Rt. Hon. Richard


Gibson-Watt, David
More, Jasper (Ludlow)
Woodnutt, Mark


Glover, Sir Douglas
Morgan, William
Worsley, Marcus


Glyn, Dr. Alan (Clapham)
Morrison, John
Yates, William (The Wrekin)


Goodhew, Victor
Nicholson, Sir Godfrey



Gower, Raymond
Noble, Michael
TELLERS FOR THE NOES:


Grant, Rt. Hon. William
Nugent, Rt. Hon. Sir Richard
Mr. Chichester-Clark and


Grant-Ferris, Wg. Cdr. R.
Oakshott, Sir Hendrie
Mr. Ian Fraser.


Green, Alan
Orr, Capt. L. P. S.

New Clause.— (CAPITAL ALLOWANCE FOR CARS.)

Subsection (2) of section twenty-three of the Finance Act. 1961 shall have effect as if there were substituted the sum of three thousand pounds for the sum of two thousand pounds. — [Mr. Gresham Cooke.]

Brought up, and read the First time.

Mr. R. Gresham Cooke: I beg to move, That the Clause be read a Second time.
The effect of this new Clause would be to give, for a car bought for a company, initial allowance and annual allowances based on the sum of £ 3,000 instead of £ 2,000 as was provided in the Finance Act last year. Some people might say that a Clause such as this is unnecessary. I certainly am not interested in buying a car of that size nor in selling one, but I assure the Committee that there is general concern that if nothing is done about this provision in last year's Finance Act the products of Rolls Royce and Bentleys may eventually be driven out of the motoring field. That would be a tragedy for this country and something which we ought to avoid if possible.
It would be as great a blow if Rolls Royce and Bentley cars were driven out of the market, as if Germany lost the Mercedes Benz or Italy the Alfa Romeo, or the U.S.A. the Cadillac, although some people might think that that was a good thing. The Rolls Royce is acknowledged in engineering as the leader in precision engineering, and there is not too much precision engineering about nowadays.
The unfairness against cars in the class of the Rolls is brought out in a letter to me from a gentleman named Cripps, and I think none the worse of him for bearing that name. Mr. Cripps pointed out the striking anomaly among cars sold after one year. If a £ 2,000 car is sold after one year, taking into account the balancing charges, the relief to the company which sells it would be about £ 1,000, but if a £ 6,000 Rolls Royce were sold by that company after one year the relief, after balancing charges. would amount to only about £ 400. That is the measure of the anomalous position which has arisen after last year's Finance Act. It has been suggested that if the Chancellor does not wish to

abolish the restriction altogether he might abolish the balancing charges in those cases, and I offer that idea for consideration.
My hon. Friend the Member for Nottingham, South (Mr. W. Clark) put down a new Clause, which was not selected by the Chairman of Ways and Means, in which he proposed that the difficulty might be overcome by making a limitation on the annual allowances every year instead of on the capital sum on the motor car. The annual allowance which he proposed was limited to £ 600. That might be fair if cars were kept for four years, but if they were sold after less than four years it would not be fair. That is a matter which would have to be considered.
My proposal. which is very modest, is that we should raise the capital limit on these cars from £2.000 to £ 3,000. After the sale of a car after three years and after the balancing charges have been taken into account. that would give a total of about £ 1,000 in allowances, and many people would consider that reasonable. This is a modest step and some modest assistance to these companies, and we have to face the situation that only one or two companies are seriously affected.
I put forward this modest proposal to see whether my right hon. and learned Friend the Chancellor of the Exchequer would accept it as a sort of holding operation so that time could be given to examine various ways in which we might achieve what many of us have in mind, namely, that these prestige cars, particularly these two makes which are a great attraction and which are renowned overseas, should not be forced out of the market as may happen in the course of a year or two if nothing is done to modify the harsh working of last year's Finance Act. I am sure that it was not intended that it should have this unfortunate effect, but I have some experience in this matter and I know that it has.

8.45 p.m.

Mr. Harold Gurden: I support my hon. Friend the Member for Twickenham (Mr. Gresham Cooke). I am not sure what my right hon. and learned Friend the Chancellor of the Exchequer intended when this penal tax was introduced. I


was not very disturbed by it at the time. I thought that at worst it was an experiment to see whether it would seriously affect any part of the motor industry. Most of us now know how serious has been the effect on Rolls Royce. If it was the intention to get some extra tax or to prevent people from getting away with something for themselves and having very nice expensive cars on the firm, most people did not object very strongly. In fact, the tax has had a disastrous effect on Rolls Royce.
I have not the figures, but I have heard it rumoured that the sales of Rolls Royce have been seriously affected, so much so that it is questionable whether the firm could remain in this section of its business— in the production of cars. This is a car which most of the world has accepted as perhaps the best ever made. Surely the export trade alone, which is a considerable part of the firm's business, is sufficient reason to keep the Rolls Royce car in production. It has a wonderful name in the world of cars.
Everyone to whom I have spoken expected that since the tax had been tried and had obviously failed in its purpose the Chancellor would restore the previous position in this Budget. The alternative was a distinct possibility of Rolls Royce going out of business. We are surprised that nothing has been done about it in the Budget, and although the Clause does not go far enough to help Rolls Royce, it will at least safeguard one or two other car manufacturers. The new Jaguar exceeds £ 2,000 in selling price, and those who admire the Jaguar company for what it has done in exports would not like to see that car taken off the production line. It is hard to say whether it will sell well. There are sufficient orders for a start to keep the line going. I have no idea what the future holds, and I do not suppose that Jaguar would tell me if I asked, but if Jaguar take a cue from what has happened to Rolls Royce the firm will be very careful before it puts very much investment into a car costing over £ 2,000.
It may be that the Committee would like to prevent anybody from having an expensive motor car. I have not one and do not particularly want one. It may be that we have reached the stage

at which we think that no one should have an elaborate car, such as a Jaguar, costing over £ 2,000, or a Rolls Royce. It may be that my right hon. and learned Friend agrees with that point of view. But what about our export trade? Rolls Royce and Jaguar, in particular, have done a wonderful export business. If we can afford to do without them for the sake of satisfying ourselves that no one is allowed to have an expensive motor car in this country, we had better know what the policy is. Since my right hon. and learned Friend indicated by his Budget that this is not just an experiment but that he proposes to stand by the tax, we are interested to hear what he says tonight.

Dr. Horace King (Southampton. lichen): Would the hon. Member qualify the remark that the Committee prevents anyone from having a Bentley, a Jaguar or a Rolls Royce? Surely the point at issue is not whether they should have one but whether they can claim tax relief on it.

Mr. Gurden: In practice this is what happens, whether we like it or not, when this sort of tax is imposed. The rumours are that Rolls Royce will have to consider closing its motor car plant. This is the effect of the tax.

Mr. Norman Cole: Briefly, I should like to support the new Clause, to which my name is attached. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Gurden) did not say so, but we know that a large part of the sales of more expensive cars are to firms who buy them on a prestige basis for use by the firms. If that sort of purchase does not take place the car manufacturers will consider carefully whether to continue in production, which will have the effect that no one will get such a car because it will not be produced.
I have no personal interest in Rolls Royce; I neither own one nor own any shares in the company. But I have a great interest, as have all hon. Members, in the prestige of the country, and there is no question but that several cars which have been named in the debate are a wonderful advertisement for British craftsmanship. There is no doubt that the firms will either have to produce a cheaper car if they wish to meet this market, which may not be of the same


quality, or they will have to give up production altogether.
These quality cars, especially one of them, are among our best economic ambassadors. Sometimes we are concerned so much with economic stringency that we overlook every other worth-while value in life. For the comparatively small amount which we shall draw back from these firms, which they previously claimed, we are sacrificing something of great value. Over the week-end there was a car rally in America— and how proud the Americans are to own these cars. If British cars are prestige cars over there, then the Rolls Royce is the prestige car above all others. If because of some economic stringency or political pressure, or any less important reason, we sacrifice the production of a car in which we are unique among the nations and which at the same time embodies fine craftsmanship and day-to-day use without necessarily being a racing car, we shall have lost something worthwhile.
I hope that the Chancellor will look at this proposal again. This will not solve all the problems. It will mean that the firms will have that much less on their own account to pay, though they will still have to pay more. The original allowance was a great help, though not necessarily for the best and most expensive of these cars, and the extra £ 1,000 would also be. It would show that the Government have, as I think they have, an interest in keeping up our quality products abroad. I am not so concerned about the people in this country having these cars. This proposal does not affect them. If they can afford the price, they will continue to have them. However, if the present large proportion is not sold to industry, there may not be any available for private persons to buy. The Chancellor and his Department will be the poorer for that, because they will not have the tax which they now draw from these firms on their profits.
If the Chancellor cannot accept the Clause, I hope he will at least show that his mind is not entirely closed to the granting of some such concession. There was a big drop from the previous figure, down to £ 2,000, and this has had a very disastrous effect upon motor car firms producing the prestige cars.

Mr. Anthony Crosland: This is a comparatively detailed point. Irrespective of what the Chancellor may say, I should like to express the view that the perspective put forward by the three hon. Members opposite is quite ludicrous in relation to the subject we are discussing. I would think it sad from all sorts of points of view if Rolls Royce closed down its car division. All the same, we must keep the matter in perspective. The total amount that Rolls Royce contributes to our balance of payments is, I should have thought, absolutely negligible. Although the firm has been successful in its efforts, we are not talking about large sums.

Mr. Gresham Cooke: Surely the hon. Member will agree that the contribution must be will over £l million.

Mr. Crosland: I should have thought It was nothing like that. I think the contribution of Rolls Royce to our export figures must be very small. The notion that because it has a very good quality product it does British exports a great deal of good is not true.

Mr. Geoffrey Wilson: Will the hon. Gentleman give way?

Mr. Crosland: Let me first finish my point. I will then give way. The notion that because we produce a small number of quality products like Rolls Royce cars, Scotch whisky and good woollens our exports soar up above those of the Germans is nonsense. What sells British goods is not Rolls Royce cars but whether the great mass of cars— Morris, Austin and the other popular cars— are first-rate. The fact is that the exports of the great mass of our popular cars have been going down relative to those of other advanced manufacturing countries despite the fact that Rolls Royce produces a quality car. I say this not because I want to see the Rolls Royce car division come to an end, but in order to bring the question into proper perspective.

Mr. G. Wilson: Does not the hon. Gentleman appreciate that Rolls Royce constitutes a selling lead? Rolls Royce cars are so well known and have been well known for so long that, quite apart from the economic value of the Rolls Royce sales or the quantity of them, the important fact is that it is a very well


known name which is recognised all over the world, much more so than British Ford, Morris or any other such name.

Mr. Crosland: I agree that it is a very well known name, and quite rightly so. But a prior question is whether the sort of prestige which Rolls Royce lends us is a type of prestige that most people in this country want in 1962 and whether or not the prestige of Rolls Royce would be really useful to the country only if it enabled us to sell far more motor car exports as a whole. The trouble is that despite this high prestige our car exports as a whole have not been doing particularly well. I repeat that I do not want to see the Rolls Royce car division closed but am merely trying to put this matter into perspective.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I do not propose again to go over the ground covered in last year's debates on the Clause, but I would point out that it was not a question of putting on a tax. It was really a question of how large a figure should be allowed for capital allowances against profits. I thought it right to recommend to the Committee then that that amount should be fixed at £ 2,000.
The Government's proposal was certainly not designed against a particular firm or intended to drive a particular manufacturer out of production. We were really trying to effect a limited reform in a rather difficult field. We are very conscious of the value of Rolls Royce. In reply to the hon. Member for Grimsby (Mr. Crosland), I should say that the Rolls Royce exports are worth more than £ 1 million a year. More than 1,000 cars are exported each year by Rolls Royce, and that is a substantial and valuable export. I think we should be a little careful about these pessimistic forecasts. The manufacturers of expensive motor cars have had other difficulties than the impact of the credit squeeze and the diminution in profits. We should be a little careful about making these gloomy forecasts about the future, because they may not advance the cause which we all want to support— the continued production of Rolls Royce motor cars. I hope that my Purchase Tax changes will help. On the standard Silver Cloud Rolls Royce motor car the

Purchase Tax reduction will be £ 359. That is equivalent to an increased tax allowance of about £ 670. I hope that will he some help.
However, where I think that my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) is on to something which I think deserves further examination is with regard to the anomalies. It is true that this has worked out in an anomalous manner, appearing to benefit certain cars and unfairly discriminating against others. I have noted what has been said about that. I do not think that the new Clause is the way to deal with it, for even with it I think the anomaly would still continue. However, I will certainly think over what has been said. I hope that this new Clause will not be pressed because I do not think that it would improve the position very much.

9.0 p.m.

Mr. Houghton: I do not know what the Chancellor means when he says that he intends to think over what has been said. Does he propose to do anything about the comments that have been made? Certainly my hon. Friends would wish to remove any anomalies within the framework of the original restriction, but we would not favour any relaxation of the limitation put on the capital allowances last year.
We went over all this ground on that ocassion. We had long debates on the subject, and unless something has happened which was unexepcted then, or unless more serious damage has occurred than was contemplated last year, I see no reason for reopening the matter in principle now. There is something to be said for sticking to what we do, at least for a reasonable period, and not chopping and changing about each year, because that creates other difficulties
It is disturbing to hear hon. Gentlemen opposite suggest that the only way Rolls Royce can be kept in business is by giving tax reliefs on capital allowances to well-to-do firms which want prestige cars for their directors and executives. If Rolls Royce's name is so good, and we know that it is, and is worth preserving, and if its home market is worth maintaining and developing, business should be prepared to pay for


such vehicles and not ask the Chancellor of the Exchequer to forgo substantial amounts of revenue in tax allowances on their capital outlay.

Mr. Gurden: We are saying that the restriction is working adversely against Rolls Royce compared with other motor cars and that that is the real difficulty. The hon. Member for Sowerby (Mr. Houghton) asked whether there had been any new circumstances this year compared with last, and the answer is "yes". I can assure him that Rolls Royce is seriously thinking that unless something happens it will have to go out of business with regard to the production of its cars.

Mr. Houghton: That has not been demonstrated to the Committee in the speeches made. In any case, the Purchase Tax reductions in the Bill will operate favourably in the case of Rolls Royce and the more expensive type of car. In general, I think that the abuses which last year's Measure was designed to check could not be reintroduced without more criticism. As I say, if industry really believes in Rolls Royce it should be prepared to buy Rolls Royce cars out of its profits and, as my hon. Friend the Member for Southampton, Itchen (Dr. King) pointed out, no one has stopped anyone from buying a Rolls Royce. They can buy four of them if they like. The only question at issue is how much tax relief they should receive on the capital outlay.
It must be remembered that if those who wish strongly to support the Rolls Royce industry, which we all do, are prepared to do so only if they can get Rolls Royce cars on the cheap, that does not say very much for the sincerity of their wish to see Rolls Royce live.

Mr. Gresham Cooke: I was glad to hear my right hon. and learned Friend the Chancellor say that he recognises that there is an anomaly in this position. Despite what the hon. Member for Sowerby (Mr. Houghton) said, experience has shown that difficulties have been developing. In the light of my right hon. and learned Friend's assurance that he will look into this matter in the course of this current financial year, about which a great number of people will be

pleased, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(RELIEF IN RESPECT OF SCHOOL FEES.)

The amounts of relief specified in section two hundred and twelve of the Income Tax Act, 1952, as amended, shall be increased by the amount of the fees paid in respect of the education of the child at any educational establishment to a maximum of seventy-five pounds.— [Mr. Turton.]

Brought up, and read the First time.

Mr. R. H. Turton (Thirsk and Mahon): I beg to move, That the Clause be read a Second time.

The Deputy-Chairman (Mr. W. R. Williams): I think that it will be for the convenience of the Committee if we discuss with this new Clause the proposed new Clause — Relief for medical insurance:
In connection with any assessment for liability for income tax, where a person proves that he has paid a premium in the year of assessment to an insurance company or other recognised body to provide insurance cover for the payment of expenses incurred by reason of any necessary medical treatment, whether as an in-patient or out-patient, for himself or any member of his family covered by such insurance, he shall be allowed such expenditure as an expense against his income up to an amount not exceeding fifteen pounds: Provided that he shall not be allowed to claim for any part of such insurance premium as relates to insurance cover provided for any member of his family, other than his wife, whose income is subject to a separate assessment.

Mr. Turton: That will be satisfactory, Mr. Williams. The aim of the proposed Clause is to create greater justice for parents. At present children who are being educated in primary schools are costing the country, on average, £ 90 a year and children being educated in secondary schools are casting about £ 150 a year. But there are half a million children who are being educated entirely at their own parents' expense at the 4,000 independent schools that have been approved by the Minister of Education. The parents of these half-million children are shouldering not only the whole financial burden of their children's education, but they are also making, through rates and taxes, their contribution to the education of the other 61 million children, and they get no tax relief at all in that situation.
It is my submission that that is not entirely just. For the rich, it is a supportable burden, but for the less well-off or the less well-paid classes— the small shopkeeper and the skilled worker —it is, in my view, cruelly hard. I notice that the Minister of Education, who is not entirely favourable to the independent schools, when making reference to a speech which he made at a conference which took place at Brighton, said this:
The present level of fees bears very hardly on some parents. For example, when I was at one of the new universities, I was thanked for my Brighton speech; they told me that no young don without private means could afford the fees of a first-class preparatory school.
This new Clause is not merely designed for that particular kind of example, because I am thinking much more of the clergymen, the Army officer and those who have very limited means, yet who are sending their children to these smaller independent schools, and are probably paying between £ 100 and £ 150 a year.
The Committee may well ask why these parents send their children to these independent schools and do not take advantage of the education afforded by rates and taxes. I think there are four main reasons. The first is religion. Many of these parents want their children to have a more positive religious background than is afforded by the State system of education. Secondly, I think that the parents are making these sacrifices because, so long as there are these very large classes in the local education authority's schools, they want their children to have the benefit of education in smaller classes, and they believe that they are more likely to bring their children on.
The third reason, which affects a great many people— and I hope that the Chancellor will realise this— is that there are many parents who, because of their jobs or positions, move either about the country or from this country overseas. For these parents, it is absolutely vital that their children should not have their education broken when moving from one local education authority's area to another. This is particularly true V those in the Army who are being posted about the country. I am well aware from my own constituency, where there is a large camp, that these are the parents who

send their children to independent schools.
The last reason is one with which some hon. Members may disagree, but it is an undeniable fact that those parents who are making these sacrifices believe that the education their children get in independent schools will give them a greater chance of reaching a university. Those are the reasons why people are making sacrifices. The Committee should be acquainted with the fact, and the Chancellor should try to work out some way of helping them.
This is a Conservative Amendment in two senses. I am not trying to secure for those parents relief in respect of the total amount that they pay. The maximum that the Clause would cost is about £ 12 million. On the other hand, it would encourage more parents to take advantage of independent schools, with a consequent saving of a considerable sum to the Exchequer. Under the new Clause, parents who were paying £ 75 a year or more would receive tax relief to the amount of £ 22 ls. 3d., which. bearing in mind the fact that they are contributing, through rates and taxes, to the average amount of between £ 90 and £ 150 a year spent on each child in State schools, is a reasonable amount of relief.
I beg the Government to look with favour on the new Clause. One of the hardest-hit classes in the United Kingdom today is that which includes the lower ranges of professional people and the small shopkeepers. I know that the people in that class are the ones who, in the main, are sending their children to these 4,000 independent schools. The Government should do more to help them.

Dr. King: I intervene very briefly to express the hope that the Chancellor will resist the new Clause. I do so because of very deeply-held principles, but I want to deal kindly with some of the points made by the right hon. Member for Thirsk and Malton (Mr. Turton). He spoke of parents who send their children to schools other than State schools because of their religious convictions and— to quote what the right hon. Gentleman said— because of the inadequate positive religious background of the State schools. I suggest that the right hon. Gentleman is doing a great disservice to Christianity, religion and


education in encouraging the view that the 1944 Act— which embodies the act of religious worship and applies in the State system of education a syllabus of religious instruction— is not carried out earnestly or sincerely by teachers in the State schools.

Mr. Turton: I ask the hon. Member for Southampton, Itchen (Dr. King) to quote me correctly. I said that these parents are asking for a more positive religious background. I did not say that the State schools were providing an inadequate religious background. I merely said that these parents wanted a more positive religious background.

Dr. King: We seem to be splitting hairs. The hon. Member is suggesting that there is a more positive religious background in private schools, and that must be a condemnation of the religious background in the State schools.
If the right hon. Gentleman had been referring to denominational Christianity, he might have been able to make a good case for the parent who has a conscientious reason for having his children brought up in a school which teaches not Christianity but the particular sectarian form of Christianity to which the parents are devoted. But Christianity, and the Christian ethic of religious instruction, is being as earnestly and as positively taught in the State schools as it is in any denominational or private school.

9.15 p.m.

On the other hand, I have profound sympathy for parents who serve overseas. We have not yet done our duty by those men and women who have served Britain not only in the Armed Services but in the Consular Service. I had occasion when returning from America to raise the question of the educational allowances which we provide for members of the Foreign Service, and I was instrumental in encouraging the Government to step up those allowances some years ago.

The ultimate solution is for the local authorities to provide boarding schools so that parents who make their contribution to Britain by serving this country abroad, whether they belong to the social class which can afford to buy their children a boarding school education or whether they are in a more lowly state,

can be sure that their children will have continuous education in a boarding school at the State's expense.

I said that I approached this matter from a deep sense of principle. I believe that the weakest feature of our educational system, admirable though it is in many ways, is the class division which still exists. We divide our children at birth and send 250,000 of them up the educational ladder one way and the rest of them up it the other way, and, in the words of the right hon. Gentleman, parents who can afford to do so can buy their children out of the inadequate provision which is made for other classes in the State system of education.

I pay tribute to the sacrifices which many people make in educating their children. The right hon. Gentleman was right in calling attention to the sacrifices which are made, not by the rich people, but by the not so rich middle-class people, those who really go without in order to buy their children this extra privilege. That sacrifice is also made by some of the poor parents living on small incomes who pay their rates and taxes for the education of their children, which, particularly to the lowest-paid workers, represent sacrifices equal to those made by some people who send their children to fee-paying schools.

The question is not whether we prevent children from being bought out of the State system but whether we give them a fiscal inducement to do so. The right hon. Gentleman is asking us to turn away from the golden vision which the Minister of Education adumbrated at the last Conservative Party Conference and which the Prime Minister mentioned in his book The Middle Way long before the war, namely, the time when all our children will go to State primary schools because they will be so good that no parents will be foolish enough to waste their money on buying places for their children outside the State system.

If we build up the standard of education and reduce the size of classes in the State system, it will become increasingly intelligent for all people to send their children to the sort of school which is good enough for 6 million English children. If we give a fiscal inducement to people to opt out of the State system, this will be more difficult of


achievement, for people will have a vested interest outside the State system of education and will resist the colossal necessary expense which the State will have to incur if it is to bring the whole of our State system of education to the class of people who are able to pay for their children to be educated in the private system. We are not asking the Chancellor of the Exchequer to prevent parents from opting out of the State system, but we ask him not to give a fiscal inducement to entice them to do so.

Mr. John Eden (Bournemouth, West): I hope that I shall not bore the Committee if, once again, I declare my interest, which I think is quite well known by now, both in education and insurance. But it is the knowledge, as it were, which I have acquired in both those walks of life which leads me to support the principle put forward in the new Clauses. I do not expect my right hon. and learned Friend to accept the detail of what we are asking for, although I should like him to do so. I should be happy and perfectly satisfied if he were to acknowledge that the principle which we put forward in both new Clauses is worthy of support.
We are asking in general terms that the Government should give modest encouragement to those who are attempting to fend for themselves. I recognise straight away that already some eneouragement is given by the State and therefore we are not broaching something which is entirely new. It might be argued that encouragement is given indirectly in the form of grant-aided schools which involve a certain amount of taxpayers' money and that also tax relief on insurance premiums is a direct stimulus to this type of expenditure by individuals.
In supporting the two new Clauses, I am interested only in trying to obtain from my right hon. and learned Friend recognition of the fact that the system of State welfare which we have built over the post-war years has now reached a stage when it should be subjected to overall and close examination. I have said often before that it is time that the structure of the Welfare State should he recast so as to be more nearly suited to the economic circumstances of people today.
I recognise that many hon. Members opposite are opposed to what we are seeking,principally on the old out-of-date basis of class distinction and on what comes out of most of their speeches on subjects of this kind, namely, the envy which they feel lest somebody is getting something better than the majority are receiving. I well recognise that, but I hope that it is not an argument which my right hon. and learned Friend will support.
People are earning greater sums of money today. Incomes are on the increase and people are able to spend money fairly lavishly on consumer goods. This is something which we all welcome. It is something which we have been actively encouraging, but I say that if people are able and willing to spend an increasing proportion of their incomes on television sets and the like they should also be encouraged positively to spend on the education of their children and on the health and security of their families. It is wrong to encourage them to do this through taxation, and this is what the present high rate of taxation is to some extent achieving.
I want to relate more closely the true cost of these services at the consuming end so that in the experience of the parents and the child or of patients in hospital there is a closer understanding of this true cost. I go further in the case of education, because I sense that as people get more and more into a position in which they can exercise freedom of choice they will be wanting to exercise that freedom, above all, in the education of their children. None of us wants to see a completely stereotyped system of education in this country. We want variety in our schools. As individuals, we have differing needs, differing requirements, differing standards of intelligence, differing standards of means and different aspirations. These are the things which a Conservative society should be encouraging to flourish.
I understand the arguments advanced by the Opposition, but I do not understand the arguments of my right hon. Friends if they say that the present structure of the Welfare State is inviolable, that what we have inherited from the past cannot be changed to meet the totally different circumstances of today.


I do not wish to penalise children who go to a school where the quality of teaching is not high. This, believe it or not, can happen in State schools as well as in private schools. I do not see why children should be forced to go to one particular school in one area. If a parent feels that his child is not benefiting from the type of education it is receiving, he should feel free and able to take the child from that school and place it in another where it will benefit to a greater extent. Many might be penalised in this respect as a result of the high rate of taxation which parents will be required to pay on top of the fees for the education of their children.
I hope that we shall move away from the present system and, perhaps, follow the advice of Professor Alan Peacock of Edinburgh University, who said that the true object of a Welfare State is to teach people how to do without it. [Laughter.] That is true. Hon. Members may mock and laugh; they seem to think of the Welfare State as a means of reducing everybody to the same standard, of spreading equality like a heavy smear across the country. As I see it, the Welfare State is there to bring sustenance and help to those most in need. When that sustenance and help comes to them from the State, it should be in amounts adequate to meet their requirements, not having been dissipated as the result of the present policy of spreading it in a broad layer over the whole community.
If the true object of the Welfare State is as I have quoted it from the words of Professor Alan Peacock, the object of Government taxation policy is to keep taxation at an extremely low level so as to give people positive encouragement to fend for themselves. This should appeal to my right hon. and learned Friend. Does not he wish to reduce State expenditure? It must be cheaper for him to encourage the development of private schools, to encourage people to contract out of State health and State medicine and to look after themselves through their own financial endeavours. It must be cheaper for him to do this than to go on calling on the taxpayer to continue to finance the steadily increasing burden of State-provided medicine and State-provided schools.
It is time that we recognised the true economic facts of the situation which Conservative policy has made possible and changed the structure of those systems which we have inherited from the Socialist past so that they accorded more closely with the realities of today.

9.30 p.m.

Mr. Crosland: One of the more pleasurable features of the sermon to which we have just listened from the hon. Member for Bournemouth, West (Mr. Eden)— a rather inappropriate contribution to this stage of the Finance Bill at this moment of history— was that, when the hon. Gentleman felt that he had to find an economist on whom he could call, he found one who is on the executive committee of the Liberal Party. This only serves to show the extremely slender resources which hon. Members opposite have at their disposal.
In a way, the sad feature of the hon. Gentleman's speech, coming from a member of the Conservative Party which purports to believe in equality of opportunity, was his order of priorities, cutting Government expenditure and reducing taxation, entirely failing to realise that a really widespread educational provision is an essential prerequisite of equal opportunity. The hon. Gentleman made great play of the need for variety. I entirely agree, and I think that my hon. Friends will be with me in this. However, any question of variety has nothing to do with the argument about private schools versus public schools. There ought to be far more variety within the State system than there is now.
One of the great injustices of the present system is that the person who can afford private education can choose between an academic school and a nonacademic school, between a boarding school and a day school, between a science school and one which specialises in sport, or one which places a high premium on religious teaching. This choice is simply not open to the parent of a child in the State system. It is one of the basic causes of the division in prestige between the public sector and the private sector that in the one there is consumer choice and in the other there is not. In the State school system, there is not even an opportunity for


choice between different secondary modern schools in the town in which people happen to live.
Turning to the point of principle behind the new Clause, although I know that it is honestly and sincerely put forward, I believe it to be completely indefensible. It is said that the taxpayer contributes rates and taxes to the State education system and, therefore, he should receive an element of rebate if he buys private education. If we based our system of public finance on this kind of principle, the thing would go haywire. All of us as taxpayers and ratepayers pay for services which most of us, we hope, will never use. Bachelors are paying for family allowances. Road users are paying for subsidies to British Railways. Healthy people who never spend a day in hospital all their lives are paying for hospitals in the Health Service. Employed people who will, they hope, never draw unemployment benefit are paying for unemployment benefit. This is what we mean by public finance and providing for social welfare through collective responsibility. We are paying for other people's benefits and we hope that we ourselves will never have to take advantage of them. Therefore, I do not think that this argument of principle can be sustained.
There is one other general background argument to which the right hon. Member for Thirsk and Malton (Mr. Turton) referred which I think, with respect, was truer a few years ago than it is now. It is that we have at what he called the lower end of the professional class a very impoverished group of people. There are still people in this group who are comparatively badly off compared with the rest of the population, but under the present Government's policy in the last ten years the middle classes as a whole have grown enormously better off. Whether this is good or bad is a basic political question, but I would concede the point to the Chancellor, if he claimed it, that Conservative policies since 1951 have made the middle classes very much better off. Far more of them can certainly afford to pay these school fees comparatively more easily than would have been the case ten years ago.
The immediate question is whether there is any possible justification for subsidising people who buy private

education for their children. This evening we cannot, thank goodness, raise the wider question whether we think it is a good thing that we in Britain, alone of any civilised country in the world, have a private sector of schools to which all relatively wealthy people automatically send their children. It does not exist in the United States to this extent.

Mr. Eden: It does.

Mr. Crosland: No. In the United States private schools are very much confined to certain areas. There are a large number in New England. There are obviously a large number of parochial schools all over the country, but there is nothing in America corresponding to this nationwide stratum of private schools— certainly not in the great bulk of the Middle West, for example. There is not in any country of the Continent. In France most middle-class children automatically go to the Lycée. In Germany there is a tiny number of schools like Salem trying to ape the English schools, but there is only a handful of them. This is the only country in the world which has this national stratum dividing the national population into two.
It is thoroughly bad from every possible point of view. But tonight we clearly cannot discuss the wider question. The question is why we should subsidise it. Why should we subsidise parents who send their children to private schools? Nobody denies that it is their democratic right to do so. Nobody denies that in some cases a financial sacrifice is involved, but it does not follow that the State should subsidise them.
I should like to take one by one the four arguments advanced by the right hon. Member for Thirsk and Malton as to why parents send their children to private schools and consider whether any of these offers a justification for the Chancellor subsidising them. First, there is the religious reason. Despite what my hon. Friend the Member for Southampton, Itchen (Dr. King) rightly said, I accept that this is certainly a motive of some parents. Nevertheless, it does not follow that the State should


subsidise these parents. The State cannot make a judgment between atheist parents and religious parents, or between Church of England parents and Nonconformist or Catholic parents. Merely because parents want to have an education for their children of a more religious character than the average is certainly no reason why they should be subsidised by the Chancellor, this being utterly contrary to our whole democratic tradition in this country.
The second reason which the right hon. Gentleman mentioned— I again grant the truth of this; it is the critical reason educationally— is that parents can buy smaller classes in the private sector. Alas, they can. One of the reasons for this division between the public and the private sector which is indefensible is that a parent can buy a superior education in the private sector, and from a superior education practically everything else follows. I say nothing against parents who make sacrifices to do this. It is a natural attitude from their own point of view. However, there is no reason whatever why the Chancellor should be asked to subsidise parents who already have the enormous advantage of being able to afford to buy smaller classes. It is a great social injustice that there is this gap and contrast between the smaller classes and the larger classes. Anyway, these middle- and upper-class families are in a position to gain this terrific advantage already because they can afford to buy a smaller class. On top of this, to subsidise them from the Exchequer is utterly indefensible.
The third point which the right hon. Gentleman mentioned was a serious point about Army officers and overseas civil servants who need a boarding school education for their children. I concede that this is a valid point. As my hon. Friend the Member for lichen pointed out, the fact is that there are now boarding schools in the State sector. The L.C.C. has a boarding school. Other authorities have boarding schools. Therefore, it is not absolutely necessary for the diplomatist serving overseas to buy a private education simply to get a boarding school education. There is an increasing provision of boarding school places in the State sector. Again,

since this is the case, there is no possible argument for the Chancellor subsidising these parents.
The last point is also a critical one and it brings us back to the question of buying privilege. The right hon. Gentleman said, absolutely correctly, that a child getting into a private school on an average has a better chance of obtaining a university place subsequently. I am certain that this is true. All the figures show it. More and more in our society — whether this is good or bad is a wider question— having had a university education is the key to the rest of a person's life, the key to his subsequent employment prospects, his income prospects, and everything else.
Increasingly it is difficult for the person who has, let us say, left school at fifteen, however brilliant he may be, started at the bench, and become an apprentice to work his way to the top. It is now not only the traditional professions like the Civil Service which are dominated by university graduates. They dominate industrial management, obviously, but it is increasingly true of every profession that to have had a university education is an overwhelming advantage.
Therefore, the parent who can afford to buy a private school education, providing a better opportunity for entrance to a university, is already buying for his child a very important, and an increasingly important, advantage. To say that on top of this he should be subsidised by the State is completely indefensible, and if this were done it would simply make an already unfair situation very much more so.
Lastly, I want to move in the opposite direction. I want to ask whoever is to reply this question. To what extent is the private sector already being subsidised by the Chancellor? The Government will know that the pamphlet produced by a Commttee under the chairmanship of Sir Charles Morris, published by the N.U.T, called Investment for Survival, has an appendix in which it is calculated by two educational economists that effectively about one-third of public school fees are now being paid by the Exchequer. So they are, through tax-free convenants and in a number of other ways. I do not know whether there is any need for checking this, but


if the figure is anything like correct, it is very serious. It means that out of a total oF. £ 60 million spent in fees for education, something like £ 20 million is effectively provided by the Exchequer.
If this new Clause were accepted, the right hon. Member for Thirsk and Malton said, it would cost the Exchequer about £ 12 million. If the one-third is correct, it would mean that the private sector was effectively paid for to the extent of more than half by the taxpayer. I do not think that position could be justified. I should like to know whether the Chancellor has any information about how far he is already paying for schools in the private sector. If the figure is anything like one-third, I hope that he will move in the opposite direction from that proposed in this Clause and cut down the amount of public subsidy already effectively going to those schools.

Mr. John Hall: When I heard that these two new Clauses were to be considered together I could not understand the connection between education and medical insurance premiums, but, as my hon. Friend the Member for Bournemouth, West (Mr. Eden) quite rightly said, the principle is not dissimilar. Nevertheless. I hope that my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) and hon. Members on both sides of the Committee will forgive me if I do not follow very closely what has been said on the first of these two new Clauses, because I want to deal more closely with my Clause which refers to insurance premiums.
I must take up one or two points made by the hon. Member for Grimsby (Mr. Crosland) merely by way of comment. He stated that other countries do not have the same kind of private school system which we have. To some extent that is true; they do not have it to anything like the same extent, but many countries have private schools. He admitted that America has them and there are several in France and several in Australia and New Zealand. In fact, one can think of a number of countries where they exist, so it is not quite true to say that this system is confined exclusively to this country.
Another point on which I should like to comment is his remark that there is much greater opportunity to get a uni-

versity place if one goes to a private school then if one goes to a State school. That may have been so, but I think it is rapidly becoming untrue. I can give an example from my constituency. The Royal Wycombe Grammar School gets the highest number of places in universities of any school, public or private, in the south of England. It has a very good record, and I think more and more grammar schools are getting records of that kind. As the hon. Member said, we want to keep this matter a little in perspective.
Turning to the Clause in my name Relief for medical insurance— I appre-
ciate that it is very indifferently drafted, but I hope the purpose is clear, namely, to allow a taxpayer to claim relief for any premium he may pay up to a limit of £ 15 to cover him and his family for expense which might arise following an illness. There is nothing sacrosanct about the amount of £ 15 inserted in this Clause. I have taken that amount because it is the amount allowed at the moment for the National Insurance contributions. There is not a direct comparison between the two, because all the contributions for the various social service benefits we enjoy, or hope to enjoy, are lumped together in one weekly insurance stamp payment. Nevertheless, the element of contribution which relates to the National Health Service is excluded and not allowed as a deduction for tax.
It might be argued from that that the cost of the insurance for the National Health Service is excluded because, unlike other social service benefits, the benefit we get out of the National Health Service is not in itself taxable whereas other forms of social service benefit— such as retirement pensions— can be taxable in the hands of the recipient. That may be the reason why the element of contribution for the National Health Service is excluded and not allowed for deduction. I do not think that is a very terrible argument against this Clause.
The Budget, as interpreted through the Finance Bill, is, among other things, an instrument for social legislation and not merely a means for raising revenue. Various allowances are made from time to time which do not apply to expenditure which will result eventually in any form of taxable benefit. Various forms


of income which otherwise would attract tax are exempted from tax. One can think of various examples of that kind. Those allowances and reliefs in many cases have no fiscal logic at all. They are given for special social or economic reasons.
Many of the taxes we enjoy in a masochistic way have been imposed for social or economic reasons. For example, we are given considerable help in overcoming our vices by finding smoking is made very expensive for us and drinking is made expensive. Some kinds of gambling, although not all, are discouraged, and we are stopped by taxes from ruining our teeth. We are dissuaded from clogging our houses with unnecessary furniture by the imposition of tax on furniture. The Chancellor has made a very praiseworthy attempt to keep death of the roads by making motoring increasingly expensive.
All these methods are directed at influencing our social habits. There is rather less encouragement given by my right hon. and learned Friend to our virtues. I think it was Napoleon who said that he gat much more out of the vices of his subjects than out of their virtues. There is no doubt that respective Chancellors have kept that saying very much in mind. Nevertheless, there are various aids given to virtues, particularly the virtue of saving. We are allowed a tax relief of a small amount on interest in savings deposit accounts, and various reductions in respect of life insurance premiums, although there is a catch because the benefits which may eventually accrue in the hands of beneficiaries are subject to death duties. I have no doubt that all of us could say a great deal about death duties. They are so penal that the only encouragement that we have for going on living in this tax-burdened community is the knowledge that it is so expensive to die. But I should be out of order if I pursued the subject of death duties.

9.45 p.m.

I merely quote these as examples of the various kinds of allowances and reliefs from tax which have no fiscal logic but are given for special social or economic reasons, and I hope that it will not be argued that because at the moment the element of the contribution in respect of

the National Health Service is not allowed as a deduction the Clause should be rejected. Indeed, the Clause as drafted could be stretched to include the National Health Service contribution, or, if not, I would be very happy to consider Amendments to give it that effect.

Why has this kind of Clause not been introduced before? I think that this is the first time that it has been put down for debate. The answer lies largely in the rapid development in this kind of private insurance over the last few years. In 1948, the three principal associations which were concerned with this kind of insurance were the British United Provident Association, the Western Provident Association and the Hospital Service Plan. The total membership in 1948, including dependants, was less than 100,000. Today, the membership, including dependants, is about 1,250,000. Therefore, in that period the membership has risen between twelve and thirteen times and the subscriptions, the premium income, by about fifty times. That sum of money is very small in relation to the more than £ 500 million which is now spent through taxation in providing hospitals and general practice care, but it indicates an obvious and growing demand for medical facilities in place of, or supplementary to, the Health Service.

Why has there been this growing demand for this kind of medical insurance? I think it is for the same reason that we have had a demand for life and pension insurance, the kind of insurance for which my right hon. and learned Friend now gives tax relief. It is because the State system does not entirely meet the full requirements of many people. The State, through my right hon. and learned Friend and his predecessors, has encouraged individuals to provide for their own life insurance, or, perhaps it is better to say, to supplement the minimum that the State gives by making further provision for their own life insurance and pensions. To encourage them to do so, it has given them tax reliefs on their premiums. I think that the State should also encourage individuals to provide for their medical facilities, where they are prepared to do so, by giving them relief on the premiums which they pay.

This type of tax concession already applies in the U.S.A. where the Blue


Shield and the Blue Cross, non-profit-making bodies, get certain tax concessions for their members. It also applies in the Republic of Ireland, which gives tax concessions of a similar nature for medical insurance premiums of this kind.

I agree that it should be part of our philosophy to encourage people to the maximum to make themselves as independent of State aid as they can so as to enable the State to concentrate the majority of its social welfare resources on those who need help most, and not to spread them widely over everybody irrespective of the help which may be needed.

I was interested to see that the noble Lord, Lord Beveridge, in another place on 29th November, last year, said that the time had come— and I quote his words—

The Chairman (Sir William Anstruther-Gray): Order. I am a little unhappy that the hon. Member for Wycombe (Mr. John Hall) should quote what was said in another place by a noble Lord who is not a Government spokesman.

Mr. John Hall: Inadvertently I transgressed, but I should like to give the sense of what he said. He was inferring that the time had come closely to examine the relationship between State and private insurance. I agree that that time has come.
At a comparatively small cost, the National Health Service could be relieved of some part of the considerable burden which it now has to shoulder in providing the various hospital and medical facilities, and at a small cost the private practice element of the medical profession could be encouraged, thereby helping to arrest the present trend for many doctors, especially young doctors, to emigrate, despite the denial about this trend which we heard from my right hon. Friend the Minister of Health not long ago. It would also help to avert the danger of something which nobody would wish to see— a complete State monopoly in medicine, which must be bad for medicine as a whole.
Finally, I suggest that the Clause provides a happy combination of fiscal justice and the encouragement of a desirable social trend. I therefore commend

it to my right hon. and learned Friend with the happy confidence that if he does not accept it now, he may on a future occasion.

Dr. J. Dickson Mabon: The hon. Member for Wycombe (Mr. John Hall) used the phrase that this medical insurance met the requirements of several people whose requirements were not met within the National Health Service. Would he be kind enough to give some cogent illustrations of the kind of requirement which the National Health Service does not provide and which these people wish to have and can get only under medical insurance?

Mr. John Hall: if the hon. Member for Greenock (Dr. Dickson Mabon) wants me to go into a general debate on the differences between the facilities provided under the National Health Service and those which might be obtained under private insurance arrangements, that might take a long time and put me rather out of order, but perhaps I can give one example.
There are people who, for very good reasons of their own, might feel that they could recover from illness far better in a private room or amenity bed. It is now very difficult to get an amenity bed because there are very few of them, and the only way one can get such privacy is by paying considerable sums, and prices in the hospitals for private rooms have gone up from 35 guineas to 50 guineas a week. That is a considerable sum, and it is for that kind of reason that people have their own insurance.

Mr. Denis Howell (Birmingham, Small Heath): I am anxious to follow the hon. Member for Wycombe (Mr. John Hall) — although I had not intended to do so until I heard his lamentable speech, which went on at great length and was interesting and often amusing but was almost completely irrelevant to the new Clause. It follows the pattern of the hon. Member for Bournemouth, West (Mr. Eden), who quoted an economist on his behalf— an executive member of the Liberal Party. The hon. Member for Wycombe has done precisely the same thing in quoting Lord Beveridge, a prominent Liberal, and calling him in aid.

Mr. John Hall: The hon. Member said that my speech was irrelevant to the new Clause. I do not think that he has read the new Clause. Would he mind pointing out in what way my speech was irrelevant?

Mr. Howell: It had nothing to do with the new Clause on the Order Paper.

Mr. Hall: To which new Clause is the hon. Member referring?

Mr. Howell: The one on which the hon. Member was supposed to be addressing the Committee.

Mr. Hall: Perhaps the hon. Member would say which one that is, as I am not sure whether he knows.

Mr. Howell: It is the new Clause Relief for Medical Insurance.

Mr. Hall: The hon. Member for Grimsby (Mr. Crosland) just told his hon. Friend.

Mr. Howell: It is true that my hon. Friend the Member for Grimsby (Mr. Crosland) mentioned the fact, but it had not escaped my notice before that. I was about to point out how gratifying it is to see the Liberal Members sitting on the Liberal bench at this juncture, as that is an unusual feature of our discussions in Committee. I hope that they will note a reactionary element quoting Liberal economists and calling them to their aid, which effectively debunks the cry that the Liberals are a party of progress.
I want to turn to the issues involved. The hon. Member for Wycombe unfortunately drew our attention to the situation in America and drew the analogy of Blue Cross and Blue Shield. That was a good point to make, and I am happy to follow it, because the logic of it is that we should have the American system of medical care. I do not know whether he wants that, but it is the logic of his speech. Those of us who have been to America and have experienced it in action hope that nothing like that ever happens in this country.
I well recall when I was spending a few weeks at Cambridge seeing an elderly gentleman collapse in Harvard Square. An ambulance duly arrived, and while the old gentleman was in a state of great distress on the floor, he was interviewed by the ambulance driver— I wit-

nessed this personally— who asked whether he belonged to Blue Cross or Blue Shield, how much money he had, what sort of medical care he could pay for, to which hospital they should take him, and so on. All the time the old gentleman protested that he had no money and did not want to be taken to any hospital because he could not afford it— and would they please take him home. He was told that they could not take him home in that condition, and there was a considerable hiatus in the proceedings before they decided to take him to some down-town hospital, where he was dumped. That is the logic of what the hon. Member is seeking.
When people come to buying privileges in our hospitals, it is a matter on which some of us speak with feeling. As the hon. Member rightly said, the numbers joining these provident societies are shooting up by leaps and bounds. That is why the Clause appears for the first time on the Order Paper. It has become a political pressure group which cannot be ignored by Conservative Members. But in practice it means that not only do these people want to buy priority in admission to hospital and want to jump the queue; they do not want to be admitted on the basis of medical need. To some extent one has a little sympathy with this feeling that it is irksome when there are many delays because the hospital service is In such a state as —

10.0 p.m.

Mr. Kenneth Lewis (Rutland and Stamford): Will my hon. Friend give way?

Mr. Howell: I am not the hon. Gentleman's hon. Friend, but I will give way.

Mr. Lewis: Does the hon. Member admit that this also applies to the trade union hospital at Hampstead?

Mr. Howell: I agree that the Manor House Hospital must have been in this position, and I have no objection to the hon. Member making what I think is a pertinent paint. If I had been Minister of Health at the time it would not have been outside the State system, and the sooner it is brought back into it, the better. I am glad that the hon. Member made the point.
What members of the public wish to do under the present system is to use the services which the State provides and to get priority for their use. The fact cannot be ignored that in the hospital world today, even more than in the educational world, the treatment which has to be bought to go into our hospitals is extremely costly and on a massive scale. The clinical, diagnostic, pathological and X-ray services, for example, cannot possibly be put into most private nursing homes or hospitals.
The hon. Member is asking that we have this great system above the National Health Service, in which one pays private consultants and perhaps pays more attractive wages to nurses in order to be nursed in a better fashion than in the Health Service, but at the end of the day the people who are paying for this have to go to the State hospital, particularly for X-ray facilities and for pathological services. In almost every case in which one analyses what is happening in respect of private pay places in the National Health Service, even where the patient is paying the doctor and sometimes paying the nurse, one finds that he is still getting priority in the use of these expensive hospital services, which are State-supplied, over and above the ordinary Health Service patient. This is an indefensible position.

Mr. John Hall: The hon. Member is overlooking that all of us, whether private patients or State patients— and I am a State patient--pay for the State medicine through the National Health Service contribution and through taxes. The private patient is not, therefore, getting something for which he has not made a contribution through normal taxation and the contribution system. He is getting no special advantage in that way. If he goes to a hospital for an X-ray as a private patient, he has to pay for it.

Mr. Howell: But the fact is that what the hon. Gentleman is asking is that they should be subsidised, and that they should be subsidised for jumping the queue. That is precisely the position. As the hon. Member admitted in his speech, if the National Health Service came up to the standard we all require,

no one in his right mind would pay for private attention when he could get the same attention under the Service. Ninety-nine per cent. of those who pay privately now do it because they wish to jump the queue and buy priority. It is a principle which the Opposition cannot possibly support.
I hope the Government will not accede to what is proposed. It would be a very retrograde stop. It would be opposed by all those who are already worried about the unwarranted inclusion in the Service of the private pay bed and private amenity bed element, which ought, on social and ethical grounds, to disappear from the Service.

Mr. Charles Doughty (Surrey, East): I support both proposed Clauses, particularly the first. So much has been said about the second that I shall refer to it only briefly. The arguments of the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) are entirely fallacious. The reason that people insure against the unfortunate risk of illness or accident is not that they wish to jump the queue but that if illness or accident should befall them they may select the hospital or nursing home to which they wish to go and the doctor or specialist they desire to treat them. Their selection may be wrong, but they desire to make their own selection and not have the matter decided for them.
I have done this myself, although, fortunately. I have not yet had to make a claim, and I hope it will be a long time before I do so. If I have to make a claim, 1 shall not hesitate to do so. I would hope that most of our people would look after their future interests by taking out insurance against risks that may happen in the same way as one insures against a car accident. It is sensible and wise and should be encouraged. If the Chancellor cannot encourage it this year, I hope it will certainly do so subsequently.
It is chiefly in respect of the first proposed Clause that I wish to speak. Many reasons have been given by hon. Members on both sdes of the Committee why so many people in this country in different income groups, high and low— I do not use the word "classes" because I do not think it is a proper one to use in the House of Commons —

Mr. Hayman: I can see very little difference between "classes" and "income groups". They mean the same thing.

Mr. Doughty: They may to the hon. Gentleman, but they do not to me. They are very different. Money does not make
blue blood— [An HON. MEMBER: "It helps."]— not even among Conservatives.

Mr. Elwyn Jones: Is the hon. and learned Gentleman suggesting that blue blood is a relevant factor in this matter?

Mr. Doughty: No, not in Wales at any rate. The hon. Member for Birmingham, Small Heath suggested that because one has mare money one promptly gets into a different class altogether. I do not like using the word "class" and so I refrain from doing so. People of all income groups like to get their children into the schools of their own choice. Their reasons may be good or they may be bad, but these reasons exist in a very large number of cases. Instances have been given tonight by hon. Members on both sides of the Committee.
It is untrue to say that the granting of tax relief for the payment of school fees in a civilised country is an unknown custom. Surely people think Australia is civilised? Tax relief for the payment of private school fees is allowed there. A scheme has been worked out and I hope we can follow it here.
Many people of the middle and lower income groups Who make great financial efforts to send their children to private schools do so at considerable sacrifice. Like the people who go to private hospitals and nursing homes, they relieve the Exchequer of considerable expenditure. That is one of the grounds why the possibility of such a relief should be very closely examined. I hope we shall hear from the Treasury tonight that those Who send their children to private schools— whether or not they get better education I am not prepared to say; one hon. Member said that State schools will soon be so good that no one would wish to send their children to private schools— will be able to get some relief, as in Australia, in respect of the fees Which they pay.

Mrs. Eirene White: I want to say a word about the proposal to subsidise private insurance premiums

for the Health Service, but more particularly I want to talk about education. I very strongly support the arguments of my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) in his comparison with the United States. I have been to the United States on several occasions and was there a couple of months ago. Heaven help us, particularly the lower paid professional people who wring the hearts of hon. Members opposite, if we reach the position which has been reached in the United States where people have to pay extortionate sums for medical care, both to the medical profession— no wonder it is against Socialist medicine in view of the fees many doctors charge— and to nursing homes and hospitals. It is the most appalling burden for professional families in America to have to try to meet these costs. Not only is the cover often inadequate in that country but it is frequently inadequate here.
Experience has shown that people who have paid into one of these private insurance schemes and have, eventually, had need to take advantage of those payments have found that they are faced with the cost of a room— perhaps of 50 guineas a week— and have discovered that their cover is not adequate to meet all the charges. Thus they must pay the additional charge out of their own pocket or do without these private facilities. A number of people have paid into schemes thinking that should the time come they would be adequately covered. But when the crunch comes and the true financial cost has hit them they have decided that they cannot use their insurance because the costs to a private patient are too great. Therefore, let us have la little less of the talk about the beauties of providing for one's medical care through these sort of schemes.

Mr. John Hall: I hope that the hon. Lady will not be misled by her hon. Friends into erecting an edifice on entirely false premises. It is not true to say that because one wants to see some tax concessions made to premiums for private insurance policies one wants to see the National Health Service destroyed and replaced entirely by these policies. I want to supplement the existing facilities.

Mrs. White: The logical conclusion of that argument is that if it is good for some it would be better for more. One could add to that logic ad infinitum and say that as we become more and more prosperous under our dear friends opposite "more people should go in for these insurance policies. The hon. Member for Bournemouth, West (Mr. Eden) clearly wishes to see the National Health Service wither away and it is obvious that that hon. Member does not like the Welfare State, wants to see it wither away and wishes to see people not expecting to receive provision from the State.
The logical conclusion of the remarks of the hon. Member for Bournemouth, West is that we should have a system of poor relief whereby only those on the very lowest possible incomes will be provided for by the public service. It is nice to have someone honestly admitting that, and it will no doubt come in useful when we start electioneering.
I wish tonight, however, to discuss the proposed new Clause dealing with education. I do not know how many hon. Members appreciate the position we shall face in education in the coming few years. In the recent debate on education we were given certain figures regarding the increase in the school population, the shortage of teachers, and so on. As one who is deeply concerned in this matter, I should be extremely disturbed if I thought that we were in any way going to relax our efforts to provide really adequate education facilities within our public system because of the desire of some hon. Members to subsidise private education.
The more one induces people to contract out the less anxious will they be about the standards in the publicly maintained schools. That is one of the strongest reasons why I have always felt that we should do nothing whatever to induce people to contract out of using the public education system. To talk about the sacrifices that they are making is quite misleading, for they are not really making sacrifices— just investments. Let us not have any more talk about sacrifices. The whole attitude of people who pay for a private system of education is that it is an investment from which they hope for some return— and they often get it— and to talk about

their making such a tremendous sacrifice is nonsense. It is an expenditure of money on which the parents or their children will get a very handsome return, and I think we ought to get rid of this nonsense about sacrifices.

10. 1 5 p.m.

The point made by my hon. Friend the Member for Grimsby (Mr. Crosland) in his admirable speech was that it would not be only by this method that the Exchequer would be subsidising independent schools. We all know that there are other methods by which already the Exchequer is subsidising independent schools. There are various methods, not only through individual covenants, but payments by industrial firms for the fees of the children of employees and fringe benefits, by very large contributions to scientific equipment, laboratories and so on, to which the big industrial firms subscribe. In one way and another, indirectly, there is a good deal of public money already going into these schools. If it is, as my hon. Friend the Member for Grimsby suggested, to be more than half, I think that we may very well ask, at a period when we are approaching such an acute teacher shortage, what business these schools have to take teachers ex quota, when the whole system of publicly maintained schools is on a very strict quota system for teachers.

Of the many injustices that might arise if the proposals in the new Clause were followed to their logical conclusion, the worst would be that, at a time when there is an acute teacher shortage, parents would be able to buy their children out of a national crisis and make it even more acute for the other children left in the maintained schools system. As far as I am concerned, that reason alone would be quite sufficient to vote against this new Clause.

There is no real validity in the arguments put forward by the right hon. Gentleman who moved the new Clause, or for saying that we must subsidise the private schools in order to achieve certain objects. We all agree that there should be greater flexibility and a greater degree of choice within the maintained school system. Certainly, I agree about that, but the important thing is to improve that system and not


to contract out of it. To talk as if there were no religious schools within the State system is again complete nonsense. The Roman Catholic schools in my own constituency, which are aided schools but not fee-paying schools, are schools at which the children of Roman Catholic parents can go if they wish and obtain the religious education which their parents desire they should have. Within the maintained school system, we are supposed to be agreeable to making arrangements for children to have what form of education their parents desire without asking for a further subsidy.

A further argument of the hon. Member for Bournemouth, West was the steadily increasing burden of expenditure and so on. This is just the old fallacy that if it is expenditure from the Exchequer, it is a burden on the economy, and if it is expenditure paid for by private individuals, it has no economic relevance at all. I do not think I need waste the time of the Committee in demolishing that sort of false analogy.

My real objection to this proposal is the fundamental one that all children are in need, where education is concerned, of the best possible opportunity to develop their talents, and that the nation requires that each child should have the best possible opportunity and that that should not depend on the income or the social standing of the parents.

Mr. Percy Browne: I find myself in agreement with the principle enunciated by my hon. Friend the Member for Bournemouth, West (Mr. Eden), but I cannot see what it has to do with the new Clause. I have three children at fee-paying schools, but I oppose the Clause on two points of principle. The first is a social point and the second concerns fiscal precedent.
Too many of us pay lip-service to the phrase "equality of opportunity." If we are to arrive at this aim, if money is to he provided in any form at all it should be provided by the State rather than by any aids to enable more and more children to go into what we now call the public schools— the fee-paying and boarding schools. I agree with the hon. Member for Southampton, Itchen (Dr.

King) that we must achieve a much higher standard in our primary schools — and we are gradually doing so— so that the time will come when parents will not wish to send their children to private schools for nine years, although they may want to send them there for five years. I want to see a 12-plus rather than an 11-plus examination, so that all children of that age can go to the school which best suits them, whether it be a boarding school or a day school. State education is there for those who wish to use it.
Just as I am opposed to free drugs for private patients, so I have the choice to do what I wish with the education of my children, and I consider that it is my private affair and that I must budget for it accordingly, as I budget for other forms of individual expenditure.
That brings me to my second point— that this would establish a fiscal precedent. The hon. Member for Grimsby (Mr. Crosland) mentioned this. We tax means and subsidise need, and give overall allowances irrespective of means— such as child allowances, which rise as the child grows older. That helps the parent who is sending his child to a fee-paying school. But what we have never done— and I hope that we are not going to start now— is to subsidise individual expenditure. For those two reasons I hope that my right hon. Friend will not accept the Clause.

Dr. Mabon: It is only proper to congratulate the hon. Member for Torrington (Mr. P. Browne) on his courage and sincerity in making the declaration that he has a declaration which is all the more welcome in that it rebuts the argument put forward by some of his hon. Friends. I agree with the hon. Member for Wycombe (Mr. John Hall) that it is unfortunate that we should have to consider these two Clauses together in one context.
One concerns a situation which has grown up over the centuries and the other a situation which has grown up only in the last twelve years. We must ask ourselves whether we want the two situations to live side by side. I believe that the general consensus of opinion is that this is not desirable. In the kind of society towards which we are evolving it would be better if we provided more


facilities and, at the same time, tried to improve those facilities. I feel that the hon. Member for Wycombe lost this argument. If there is a good case for asking for facilities which are not now provided by the National Health Service, the case should be argued by the patients under the National Health Service. They should constantly hammer at Members of Parliament to impress upon the Ministry of Health and the Department of Health for Scotland to see that these facilities are improved.
It is terribly wrong that a doctor, examining a patient, should have to say to himself, What treatment should I prescribe? How much can this patient afford to pay? "The two questions should not run side by side. If a patient needs a private bed for physical or psychological reasons, it is eminently sensible that provision should be made accordingly in the National Health Service. If such provision is not made, it means that there is something wrong with the Service. A great many improvements have been made in the National Health Service, and every pound paid in medical insurance to seek better private treatment within the National Health Service is a vote of no confidence in that Service. This is the big charge that I make against the case put up by the hon. Member for Wycombe.
If private medicine, so to speak, had its own institutions and its own facilities and were completely independent of the State service, then his argument of virtue might stand. It might be considered comparable to the argument about public schools. But these matters are not comparable, and it is true that private medicine relies overwhelmingly for the facilities which it provides for people on the public service. On that argument, the hon. Gentleman's plea must founder.
As the Minister of Health said last night, we are not within the present plan providing for a larger proportion of pay beds, which means that if we were to accept the new Clause— this is the object of the hon. Gentleman's new Clause, as he said— and raised the numbers participating from 1 million, the pressure on pay beds would be higher. If the number of pay beds is limited both now and in the future, the price paid for them to the private consultant

and to all those involved, quite apart from the price which the Minister of Health might ask for pay beds as his contribution towards the sustenance of that part of the hospital service, will be higher. If the price of paybeds were consequently to rise, the hon. Gentleman would be defeating his own ends. Many people would find that the insurance premiums for comprehensive cover would gradually rise so that a very small number of people could enjoy the kind of facilities which they want to enjoy through an insurance scheme. The hon. Gentleman, in a sense, defeats his own object by urging that we should do this.
The scheme could work only if the Minister of Health is prepared to say that he is willing to allow the number of pay beds to be enlarged and more and more of the facilities of the public service to be put out for private hire. If the Minister is willing to say that, I concede that the logic of the hon. Gentleman's case is pretty profound and that it would be difficult for the Treasury to say No". But surely the Minister will not say that. Surely it would be completely wrong and almost reprehensible in the concept of the Health Service which, I am glad to say, hon. Members on both sides have championed in Health Service debates.
It is right that people who want and demand a good service, either on their own behalf or on behalf of their relatives who are ill, should say so and should make their complaints known. It is not widely known but true that a patient can say whether he should see this consultant or that consultant. He can say, "No, I do not wish to be referred to Mr. So-and-so or to Dr. So-and-so. I prefer to go to some other consultant." People, when going to their doctors, believe that whoever their doctor chooses is the best man. That may not necessarily be so. There are many men of comparable abilities in one area— indeed, in one hospital. It is a matter of pure chance that a patient is sent to this or that consultant.
The patient has a right to ask his doctor to send him to a certain consultant. He has a right to ask about amenities and to ask whether beds are isolated from the rest of the beds. It is not always the case that it is good for a patient to be away from the rest


of the other patients. While I concede that this is not entirely a medical judgment and that there is a certain social assessment to be made in this regard, nevertheless we should consider carefully the problem of having people in independent beds in hospitals.
It is wrong for this case to be argued on the present Health Service basis. If, however, the hon. Gentleman were willing to amend the new Clause and to say that it should apply only to private institutions subsisting entirely on private funds, I admit that that would be a difficult argument to counter. But there is no need to counter it at this stage because the colossal sums involved in constructing hospital facilities, in hiring staff and in getting all the medical men assembled to take on this burden would

be so enormous that no insurance scheme would be able to publicise a premium attractive enough to people to use it. I therefore believe that the new Clause dealing with medical expenses is certainly the most unrealistic of the two new Clauses.

10.30 p.m.

As for the first new Clause, I heartily agree with what has been said by my hon. Friends. It would seem to be turning the clock of social progress back and to be wrong that we should return to any situation where different income groups or classes, or blue-bloods and red-bloods should have different terms under the Health Service or in education. The trend is the other way. I welcome it, and I hope that these two new Clauses will not be incorporated in the Bill.

Sir E. Boyle: We have been discussing these two Clauses for 1½ hours and I hope that the Committee may feel that the time has arrived when we can come to a conclusion on them. My right hon. Friend the Member for Thirsk and Mal-ton (Mr. Turton) has done the whole Committee a service in bringing forward a proposal which has enabled hon. Members on both sides of the Committee to express their views on subjects about which they obviously feel strongly. I shall keep rather rigidly to the Clauses and therefore I will not attempt to follow the hon. Member for Greenock (Dr. Dickson Mabon) and give my views on classes, income groups, blue blood, and the like. As my right hon. Friend the Member for Thirsk and Malton suggested, his new Clause would cost about £12 million in a full year. For that reason alone I am sure that he will recognise that it could not be considered this year in view of my right hon. and learned Friend's general Budget judgment.
I do not wish to rest my argument on that point, however. Matters of principle have been raised on which I think I should say something to the Committee. In general, I agree with the view expressed by my hon. Friend the Member for Torrington (Mr. P. Browne) that we ought to hesitate a good deal before we depart from the principle on which we have always acted hitherto--that Income Tax personal allowances do not take account of what the taxpayer actually spends on current goods and services. I believe that to be an important principle.
I always listen to my hon. Friend the Member for Bournemouth, West (Mr. Eden) with great interest on the theme on which he spoke tonight. I agree with him that it was right that part of the Welfare State should wither away. The part which, rightly, has withered away to a considerable extent under this Government has been that part where we were subsidising not people in need but particular objects of expenditure. I will not develop the point. I only draw the analogy with the new Clause. It was quite right to get away from the principle that whatever a person of whatever means spent on bread he was helped

out of the proceeds of taxation, just as I think it right to get away from a situation where every local authority, whatever its needs, receives a general subsidy on housing. But I am bound to say that I would regard it as inconsistent with the attitude of my hon. and right hon. Friends who have spoken on that part of the social services if we were now to say that there should be an Income Tax personal allowance arising out of a particular kind of current expenditure on a particular service, namely education.
Furthermore, on education, I rather agree with my hon. Friend the Member for Torrington when he said that it was possible that in future a smaller number of people would want to pay for independent education throughout their child's school career. It is quite right that the best of parents should consider how he can best help his children, and in education he has a considerable measure of choice. A parent might rightly feel that it would be better for his child to start at a local primary school and feel that he could do more for the child at a later stage in his career. Obviously there might be a time at the start of adult life when a son or daughter who wanted to go into one of the professions might be earning very little indeed. It may be that a parent will feel that he can do more to help his child at this stage rather than by sending the child to an independent school at the very first stage. In the same way, many people feel that there are social advantages for their children in having been to a maintained school at least at the start of their life. This is certainly true in some country districts where the standard of the maintained schools has risen very much in recent years. My right hon. Friend cited the case of a clergyman. I could understand the view of a clergyman who felt that it was not a bad thing for his child to start life by going to the same school as the vast majority of other children in the district.
I make these points not to express a moral judgment as to where a child should be sent to school but simply to point out that a parent has a very real element of choice here. I cannot help feeling that it would be a new principle,


and a doubtful one, if my right hon. and learned Friend were to give Income Tax personal allowances taking into account this particular type of expenditure.
It is worth remembering also that, during the last few years, the financial position of many parents who have children at school has improved. We have the differential child allowance to which my right hon. Friend the Member for Thirsk and Malton referred. We have had a reduction of ls. 9d. in the standard rate of Income Tax since 1951. Also, we have had the Surtax reliefs, to which, strangely enough, no one has referred during today's debates. I hope that I shall not start the debate going again if I make a wholly uncontroversial allusion to them now in this context. [Interruption.] Far from attacking them, I am making the point that they must make some difference to the position of a good many parents who are educating their children privately.
Turning to the second new Clause— Relief for medical insurance— many of the arguments which I have used in the first case will apply to this also. It seems to me inevitable that the proposal made by my hon. Friend the Member for Wycombe (Mr. John Hall) would go further. It would soon be argued that certain medical expenses not covered by insurance should also rank for relief, and I do not think that we could accept my hon. Friend's suggestion.
In general, I believe that the principle on which we have acted in regard to tax allowances has a great deal to be said for it. We should not depart from that system without a very great deal of thought. While I entirely appreciate all the points which have been made by my hon. Friends, I could not advise the Committee to accept these new Clauses. I believe that we should stick to our policy of helping those in need. We hope to achieve a steady improvement in the State services over the years, having a system of tax allowances which is fair to everyone. I repeat what my right hon. Friend the Leader of the House said at the very start of the Session. We on this side believe that whereas Surtax payers, rightly, did not come at the head of the queue, it would be wrong to say that they should have

had no place in the queue at all. They have now had their place.
We believe that it is by our approach of helping those in need and having a system of tax allowances which is fair to all taxpayers in accordance with their personal circumstances that we should work our taxation system in the future.

Mr. Crosland: Can the hon. Gentleman say anything in reply to the question which I put?

Sir E. Boyle: I apologise to the hon. Gentleman. I meant to reply to him. There is a difficulty here. In the ordinary way, I would say that if the hon. Gentleman would put down a Question I would do my best to obtain the information. The difficulty is that information about charities and covenants in that connection is not held centrally. I um told that there is a range of covenants where there is no central information, and, therefore, I might have to give the hon. Gentleman the answer that the facts could not be obtained without disproportionate work. I will look into the matter in more detail and let the hon. Gentleman know.

Mr. Frederick Willey: I was intrigued by what the hon. Gentleman said in the earlier part of his speech. He seems to be trying on the shoes of the Minister of Education, and what disturbed me a little was that the shoes seem to fit too easily. It has become the conventional approach of the Conservative Party to make sympathetic remarks about the primary schools. We want something more constructive than that. I do not want to say anything more to dissociate myself from the hon. Gentleman. I am very glad that he dissociated himself from those behind him.
I want to give a warning to the right hon. Member for Thirsk and Malton (Mr. Turton) and his hon. Friends. I do not think that they know what they are doing. Admitting that the calculation is difficult, I would accept Mr. John Vaizey's estimate as being roughly correct. At present the private sector, the public schools, siphon back from the Exchequer about one-third of their income. The right hon. Gentleman is now suggesting to the Committee that a further one-third should be siphoned


back by way of the Clause. That would be two-thirds of the income of the public schools coming from the Exchequer.
The hen. Member for Torrington (Mr. P. Browne), the Bow Group and many progressive Tories—in fact, we had a debate on this last summer— have suggested that at least one-quarter of the places in public schools ought to be free places and should be provided by way of Queen's scholarships or in some other way. If this suggestion were adopted, we should be providing that the whole of the income of public schools will come from national funds. If we do it, it will be nationalisation. What the right hon. Gentleman and his hon. Friends propose is that we should nationalise the public schools. It is no good saying that by this means or that means the income should be provided from public funds and then saying that there should be no public control.

Mr. Turton: The hon. Gentleman is guilty of an inaccuracy. The Clause deals with 4.000 schools. of which 500 are public schools.

Mr. Willey: The right hon. Gentleman seems to be equally unobservant. I am interested in the amount of £ 12 million, which corresponds with the present £12 million provided by way of covenant. Mr. Vaizey estimates that one-third of the income of public schools comes from covenants, and I assume on the same basis that this would provide about that amount. At the end of the day the right hon. Gentleman has to face the position that by this stratagem and that stratagem he has ensured that the income of the public schools will come almost entirely from public sources.
That is a remarkable contribution. I do not think that the right hon. Gentleman and his hon. Friends really understood what they were suggesting. It is remarkable that they should make this suggestion of a general allergy towards the Welfare State. It was remarkable that the hon. Member for Bournemouth, West (Mr. Eden) talked about the Welfare State being dispensable in the context of education. This could not make a more harmful contribution to political thought at the moment.
I accept the four points the right hon. Gentleman raised. My difficulty is seeing the relevance of the four points to

the new Clause. The first point the right hon. Gentleman raised about the religious or denominational foundation of educational establishments is a very difficult question, and we have to face it. It is not a question about which we need be unduly depressed, because many colleges have such a foundation and they have been able fully to accept State support. However, it is something to which we must pay close regard. We should not ignore this aspect of education when we are talking about the private sector.
The other questions are equally irrelevant. I admit at once that there is a case for a further examination of boarding school education. We discussed this topic when we discussed public schools. There is the very difficult and aggravating question now of entrance to universities. I can think of nothing worse than to support a Clause such as this by the argument that it would provide access to education at universities. This is most unhelpful.
As to the size of classes, we recently had a debate on education. We are appalled by the prospect, but the situation would not be helped by the Clause. So I would express appreciation to the Financial Secretary for resisting this. I am, however, a little unhappy that he was not more forthright in opposing these proposals and supporting the Welfare State and our education and health provisions. He should have said that these are the first priority. Forgiving him for those shortcomings, I hope that now that he has indicated that the Government are unwilling to accept the Clause the right hon. Gentleman will withdraw it.

Question put and negatived.

New Clause.— (SCHEDULE E: PUBLIC EMPLOYEES' EXPENSES.)

The Ninth Schedule to the Income Tax Act, 1952 (Schedule E Rules), shall have effect with the addition at the end of paragraph 7 of the following:—
There may be deducted from the emoluments to be assessed of the holder of an office or employment under the Crown or under a local authority (within the meaning of section twenty-one of the Finance (No. 2) Act, 1945) all expenses reasonably incurred for the performance of the duties of the office or employment."— [Dr. King.]

Brought up, and read the First time.

10.45 p.m.

Dr. Horace King: I beg to move, That the Clause be read a Second time.
I have been asked by my right hon. Friend the Member for South Shields (Mr. Ede) to move this new Clause as he is unavoidably unable to be here to do so. The Treasury has still to carry out a number of useful little recommendations of the Royal Commission on Taxation and Profits and Income, 1955. The proposal in this new Clause is one of them. What it seeks to iron out is the difference between the expenses allowed under the rules of Schedule D and those which are allowed under Schedule E, expenses to be set off against one's income when seeking Income Tax relief.
I understand that as a rule businessmen come under Schedule D whereas professional men come under Schedule E and the present rules under Schedule E are far too rigid. As the Royal Commission pointed out, they have been condemned over and over again even in courts of law where judges have expressed the opinion that they are unjust and unreasonable. The formula under Schedule D, which is less rigid, provides that the expenses it allows are:
all expenses reasonably incurred in the appropriate performance of the office or employment 
The new Clause seeks to transfer that definition of expenses to Schedule E so that professional workers in the public services would benefit.
To illustrate to the Committee what are the kind of expenses reasonably incurred in a public service, I speak of those of a teacher because that is the profession which I know best. There are plenty of such expenses. There are subscriptions to learned societies, text books which the teacher needs for teaching his class, books he needs for wider study if he is to keep abreast of his subject, protective clothing if he or she works in laboratories, handicrafts or domestic science. There is also academic dress. I well remember thirty years ago making an Income Tax claim for my academic gown, but never succeeding in securing any remission from the Inland Revenue. There is the cost of attending various refresher courses and educational courses.
The teacher is entitled to claim for a number of these expenses, but he does not always get them as of right. He can claim for protective clothing and academic dress. I understand that his subscription to a professional association is allowed as of right, but the rest are still subject to the decision of the local Income Tax office. I doubt whether the Committee is aware of the vast amount of work which goes on in the teaching profession in refresher courses. The work of every branch of education is changing and developing very rapidly, so rapidly that almost every county teachers' association is organising annual courses for its members, courses in infant education, in junior education, in secondary education, in the teaching of various subjects, in new methods of teaching and in the new problems which are thrown up by the rapid development of secondary education.
For example, my own county arranges such courses each year, and they are attended by hundreds of teachers at their own expense. Last year, I lectured at such a course in Somerset, and I understand that an annual refresher course attended by 100 or 200 teachers has been held in that county for more than twenty-five years. Most of the universities and training colleges run refresher courses during the summer recess. Ever progressive teacher in the country who wishes to keep abreast of developments in education is bound at some time or other almost every three years to attend one or other of the courses I have mentioned.
What is true of teaching is true of every other public service profession, of every professional man and woman who wishes to keep abreast of the developments in his field of work. The new Clause would permit a professional man to claim tax relief on legitimate expenses incurred in making himself better able to carry out his professional duties.
I call the Committee's attention to two passages in the arguments on this subject in the Report of the Royal Commission on the Taxation of Profits and Income, a Report to which, I am certain, the Chancellor would wish to pay tribute, one of the most important documents on the subject of taxation


which has appeared this century. The Report says:
It is not enough therefore to ask whether the terms of the office or employment specifically require the employee to incur the expense, and, if not, to disallow the expense as a tax deduction. In many cases the taxpayer himself must he the interpreter of the obligations of his office. To take one instance … what rule is to determine with precision the limits of a clergyman's duty to his parish? How far is it his duty to show hospitality, to aid the sick, to organise or support benevolent activities, to supplement his ministry with visiting preachers?".
If he does any of those things, he is at present debarred from claiming tax relief on them as legitimate expenses of his profession.
In a longer passage, the Report says:
We do not use the word 'professional' here in any precise sense: we have in mind all those persons in office or employment whose work is of such a kind that they are expected to employ in it an equipment of expert or specialised knowledge. Doctors, teachers, lawyers, scientific workers, clergymen fall into this category. Such persons require to maintain and often to increase their professional equipment of knowledge, and it must often be quite impossible to relate the expenses of so doing to any specific obligation in performing the duties of a particular period. Their obligation is not only to be skilled in learning but to remain skilled in learning as conditions change. The expenses of so doing are represented by subscriptions to professional and learned societies, purchases of books and magazines, attendance at conferences, travel for research, purchase of instruments, etc. Yet. under the present rule—
which the new Clause seeks to alter—
the Revenue is forced into taking what seems to us rather unreal distinctions between what an employer insists upon and what he does not, between what a person is obliged to do in the performance of his duty and what it is desirable that he should do in order to be able to perform his duty; and between current expenses of maintaining knowledge or skill for one post and capital expenses of acquiring improved knowledge or skill to qualify for another post.
It is for that reason that the Report comes down fairly and squarely in favour of abolishing the tight definition which is drawn under Schedule E, suggesting that professional people should come under the broader definition of the Schedule D rules. It is that broader definition which we seek to carry out, and I hope very much that the Chancellor will give this the most sympathetic consideration.
This is something which has been before the Committee year after year,

although we have never had the privilege of having it selected for many years. There should be no administrative difficulty in carrying it out. Of course, the professional man must decide what are his professional expenses; and it may be argued that to check these involves great administrative costs, but in the case of teachers it should be possible for expenses to be certified by a director of education or a headmaster and, in the case of civil servants or local government workers, by some superior officer. If this Clause is adopted it will right an injustice which professional people feel that they have vis-à-vis businessmen in the matter of expenses they incur in the professional work in so far as Income Tax is concerned, and I therefore hope that the Chancellor is going in this case to accept the recommendation of the Royal Commission and accept the new Clause.

The Solicitor-General (Sir John Hobson): The hon. Gentleman the Member for Southampton, Itchen (Dr. King) has moved his Clause with great moderation, but, if die will permit me, I must say that he was not quite correct in saying that its sole purpose was to iron out the differences which exist between allowances for expenses under Schedule D and Schedule E nor that there is a contrast as between the professional man and the business man. The true position is that most professional men are, for tax purposes, assessed under Schedule D and the vast majority of businessmen, other than those carrying on their own business or trade, are assessed under Schedule E.
The difficulty arises—and this has been recognised time and again—with the professional man in an office or employment Who falls to be assessed under Schedule E. This has always caused some trouble and occupied a lot of the time of the Royal Commission on Taxation; but the solution proposed by the hon. Gentleman would really only succeed do drawing a distinction between those professional people in public employment and those who are in employment other than that of a public authority or the Crown. It is primarly for this reason that the Government feels itself unable to accept the proposed Clause.
Under the rule now in force, any office holder or employee, whether business or professional, may only claim a deduction under Schedule E in respect of expenses incurred "wholly exclusively and necessarily" in the performance of the duties of that office or employment. On the other hand, a professional man in private practice and assessed under Schedule D may claim a deduction for expenses "wholly and exclusively laid out or expended for the purposes of" his trade, profession, or vocation.
The present law does not go so wide as the hon. Gentleman suggested as to say that to come under Schedule D one has merely to show that the expenditure was reasonably incurred.

11.0 p.m.

The Royal Commission, which reported in 1955, recommended a new Schedule E rule to allow deduction of expenses for Schedule E taxpayers, and it is this formula which the hon. Gentleman has incorporated in his new Clause, omitting one of the words in that formula, because he has left out the word "appropriate" before the words "performance of the duties." His formula is, therefore, even wider than the proposal of the Royal Commission, and it is to be applied only to servants of the Crown and of local authorities.

There was a debate on the subject of the expenses which should be allowed under Schedule E in 1957. The Government then decided against any general rewriting of the Schedule E expenses rule, but did by the Finance Act of the following year, in 1958, allow the expenses of professional subscriptions to be deductible from the emoluments of a person who was paying tax under Schedule E.

The Schedule E rule has often been criticised by the courts, and there is no doubt that it does occasionally cause hardship, and one can get cases, particularly of professional people, where the strict impact of the rule can in certain cases give an appearance of causing injustice. But there is no doubt at all, I think, that the solution proposed by the Royal Commission and partially adopted by the hon. Gentleman is not a satisfactory solution of this problem.

No one who has studied this problem of the allowance for expenses in tax assessments under Schedules D and E can have failed to recognise the essential difference between offices and employments on the one hand and a trade or profession on the other hand. It must have a tax effect on allowances for expenses.

Certainly the Royal Commission quite plainly recognised that difference. The Commission referred to the fact that there is an inherent difference between income from employment and income from the activities of the self-employed. In judging what is reasonably done in the performance of the duties of an employment it must always be of major importance to know what the employer required by the contract, what is the professional practice in comparable employments, and what provision the employer himself may make at his own expense for the employee's use. On the other hand, the person who is engaged in a trade is directing his own income-earning activities and is of necessity forced into the position of judging whether the expenditure is of advantage for the business. No one else can be qualified by similar knowledge of the facts and hazards of the particular enterprise. Therefore, the Royal Commission said in paragraph 135 of its Report that it did not disagree with the Revenue's presentation of the problem.

The circumstances of most offices or employments are not such that any difficulty arises, nor is there any hardship caused in these cases, I think, by the operation of the existing Schedule E rule. I think it is in the cases of professional employment or offices of a professional nature that the difficulty arises. Again the Royal Commission did draw this out very clearly in paragraph 135 when it said that
there are many offices and employments the true obligations of which are not capable of being precisely defined.
It was to that difficulty that the Royal Commission specifically directed its attention and its criticism, and it is this problem which has been dealt with partially by the 1958 Act. There was a Minority Report of the Royal Commission which did not support the view that such an amendment should be made to the Schedule E rule. I think I ought to point out that in the debate of 1957


the hon. Member for Sowerby (Mr. Houghton) found himself in opposition to the views which have been expressed this evening on the necessity of amending the Schedule E expenses rule, He said,
There is no doubt that there is a problem here, but I think that my hon. Friends and I would agree with the Financial Secretary that the Royal Commission has not found the answer.
On that occasion, at any rate, he thought that he had the support of the hon. Member for Itchen in not approving the proposal of the Royal Commission, but it has been put forward in a wider form this evening. The hon. Member for Sowerby, whose knowledge of these matters is far more extensive than mine and whose experience is very great in matters of this sort, went on,
There is no doubt that from the administrative point of view to have to apply a formula which refers to expenses reasonnably incurred for the appropriate performance of the duties of the office is to open up a limitless range of argument and difficulty. One of the virtues of the rules under both Schedule E and Schedule D at present is that they require the expenditure to be wholly and exclusively incurred in something, one in the course of trade and the other in the performance of an office. To say that expenditure shall be admitted if reasonably incurred in the appropriate performance of an office seems to me to add to the difficulties of interpretation and application rather than to lessen them.

He made the further point,
We must not, however, lose sight of the fact that when a person is working for an employer and incurring expenditure in the course of doing that job, whether wholly and exclusively or only reasonably, the employer has a responsibility towards the employee to cover expenditure properly incurred in the performance of his office. In many cases that is something which can be agreed between the employer and the employee as part of the conditions of service."—[OFFICIAI. REPORT, 2nd July 1957: Vol. 572, c. 1047–48.]

Mrs. White: If he is arguing in this way, 4would the Solicitor-General address himself, for example, to the Minister of Education, who could suggest to local education authorities that all items mentioned by my hon. Friend should be supplied by them?

The Solicitor-General: That may well he. But the question whether it should or should not be is a matter between the employer and the employee and not a matter for the Revenue.
There is another matter of fundamental importance on the differences between Schedule E and Schedule D and on widening, as is proposed in the Clause, the Schedule E expenses rule. It is that the great majority of taxpayers are assessed to tax under Schedule E, and, apart from any question of principle, the practical considerations are of great importance. If there is to be a general widening of the tax relief and a deduction because of expenses, arising out of individual and particular circumstances, and the particular way in which an individual who is an employed person desires to spend his money, it will involve the Revenue in the enormous administrative task of investigating the individual circumstances of up to 18 million taxpayers. This would be a tremendous burden upon the Revenue, and while I recognise that the hon. Member's proposal is limited to public servants, it would no doubt be only the first step which would be bound to lead to the removal of the rule generally and to all persons taxed under Schedule E having the benefit of the rule now proposed only for public servants.
However that may be on a general argument as to the necessity or wisdom or otherwise of amending the Schedule E expenses rule to conform to the Schedule D expenses rule, I think that there is an over-riding objection to the Clause in that it proposes a relaxation of the tax rule for public servants only. The hon. Member referred to clergymen. The number of clergymen employed in public offices or employment under the Crown or local authorities must be strictly limited, and I do not think that it would be of any great benefit to the general body or clergy to have this Clause incorporated into the tax law. As far as I know, there is no other provision which gives public servants a tax privilege, and I think that we ought not to begin now to do such a thing. Public servants, above all others, are in general provided with everything which they require for the performance of their duties. If an expense is necessarily incurred, it is usually reimbursed, and if it is not reimbursed the inference is that it is not necessarily incurred and, therefore, does not qualify for relief.
Apart from the expenses which the hon. Gentleman mentioned, there would be questions of entertaining expenses. Should a public or civil servant or a local authority official be able to say that it was necessary for the performance of his duties that he should entertain people to lunch? There are on certain occasions official entertaining funds, and here would be a claim that something outside that should give rise to tax support for the official. There are offices at home, there is the use of more convenient houses, and there is the question of better dress. As to special clothing, I am informed that usually employers provide it, but when they do not, it is very frequently allowed as an expense by the Revenue.
I submit that it would be quite unacceptable that there should be a more generous statutory rule for public servants than for the rest of the persons emplowed in trade and industry or the professions. It would mean that the Ministry of Works attendants who look after us in the House of Commons might get certain expenses allowed to them which the policemen who also attend us in the House would not. It would mean that firemen and Post Office employees, but not van drivers of commercial firms, would get tax allowances. It would mean that industrial civil servants in ordnance factories and dockyards would get tax advantages which ordinary employees in industry would not. Above all, it would mean that inspectors of taxes and other employees of the Inland Revenue would get tax advantages which the citizens from whom they were collecting the taxes would not.
The hon. Member made particular reference to school teachers. I can see that as a profession school teachers present a very difficult problem. It would mean that school teachers in maintained schools would get a tax advantage and that teachers in privately supported schools and university professors would not. This would seem to be wholly wrong. Therefore, on this ground, apart from the general principle of the necessity to maintain the Schedule E rules, I submit that it would not be right to accept the proposed Clause.

Mr. Houghton: First, I congratulate the Solicitor-General on his maiden speech in our debates. It is rather late in the day for us to say that we want to hear him many more times in future, at least on the Finance Bill.
I am sure my hon. Friend the Member for Southampton, Itchen (Dr. King) will appreciate the difficulty of pressing for a concession on the Schedule E expenses rule which is confined to the public service—the central and local government services. Whatever the merits of the recommendation of the Royal Commission in paragraph 140 of its final Report, my hon. Friend will agree that it would be indefensible to modify the rule in favour of public servants and to deny all other employed persons equal treatment under a new formula.
The Solicitor-General made his task lighter by relying so heavily on a speech that I made five years ago. I would make exactly the same speech again tonight, but I do not think that I could trespass on the time of the Committee to develop this theme fully once more, because the narrow issue in the new Clause is whether a relaxation shall be given to public officials only, and I am sure that my hon. Friend, whose sense of fairness in these matters is unrivalled in the Committee, will see that he could not press for that to be done.
There is no doubt that the difference between the Schedule E rule, which is "wholly, exclusively and necessarily incurred in the performance of an office," and the Schedule D rule, which is "wholly and exclusively laid out for the purposes of trade," gives rise to a good deal of dissatisfaction among employed persons. They feel that the man in business on his own—and this includes the professional man in practice on his own account—has greater freedom to incur expenditure for his own personal benefit and pleasure when it is charged against his taxable profits than is the case with an employed person who has to satisfy the Inland Revenue that the expenditure was necessarily incurred, as well as wholly and exclusively incurred, in the performance of his office.

11.15 p.m.

The Solicitor-General has drawn attention to the omission from the new Clause of the formula which the Royal


Commission included—that the expenditure should be reasonably incurred in the appropriate performance of the office. The word "appropriate" is significant in this connection, and without it the rule would be wider than the Royal Commission recommended. I fear, however, that the Royal Commission did not find the solution; nor do I believe that the Minority Report found the solution. This is one of the unresolved grievances of our tax system.

The remedy, I very much regret to say, cannot be found in the way proposed by my hon. Friend. Hon. Members on this side of the Committee feel that the expenses racket—which it is so frequently called; justifiably, in my view—needs to be tightened up rather than relaxed. This Clause would open the door to a very wide field of expenditure which it would be very difficult for the Inland Revenue to check or to deny. It would greatly complicate matters of administration and, I believe, lead to a greater abuse of the expenses provisions of the Income Tax Code than would be the case if we left matters as they are.

I am sorry to say this; it is a difficult and complicated matter. Probably one day we shall get a little nearer to the solution, but, unfortunately, the new Clause does not bring us any nearer that objective.

Dr. King: I am accustomed to waging war alone on the Treasury, but to wage war on the Treasury, represented by the persuasive eloquence of the Solicitor-General, and also reinforced by my hon. Friend the Member for Sowerby (Mr. Houghton)—who is about the greatest expert on taxation in the House—is more than one hon. Member can stand.
I want to say a few words in reply to the arguments that have been raised against the new Clause. First, I apologise for the absence of the word "appropriate". I am quite prepared to sit down if the Solicitor-General will say that he will accept the new Clause if the word "appropriate" is inserted. It was by a regrettable oversight that it was left out. Obviously what we seek to do is what the Royal Commission on the Taxation of Profits and Income re-commended. We do not seek to go beyond that.
If the new Clause appears on the Notice Paper in the form it does, it is because the professions which have become aware of the injustice most are the organised professions. It is the teachers who have been making representations on this question ever since the Royal Commission made its report. It is the civil servants—including some of the Income Tax inspectors to whom the Solicitor-General referred—who feel the injustice of the present system. It is the public service professions who first called attention to the matter.
I would be prepared to withdraw the Clause if the Solicitor-General would introduce in its place a wider provision, including all professional persons, so that we would not have the anomalies to which he referred in the latter part of his speech. The Solicitor-General has heavily criticised the solution propounded by the Royal Commission, and in this he has been supported by my hon. Friend the Member for Sowerby. But neither has propounded a solution to the problem. If the new Clause is rejected the problem remains.
There are great groups of what we call the professional workers who incur as part of but not all of the necessary expenses of their job—not because their employers say, "You must take a certain book," or "You must have a certain instrument ", but because they wish better to serve the profession to which they belong—expenses which they regard as morally necessary, at any rate, but in respect of which they are not allowed to claim for tax purposes.
I hope that the Treasury, which does not accept the Royal Commission's solution, will continue to give consideration to this problem, because as long as there is injustice in the taxation system it will continue to fester in the minds of people who suffer from it, and I prophesy that we shall return to this question again on other Finance Bills.
I should like to make what is almost an annual protest against the Treasury gambit, which has become so monotonous, that if we give a reform to one group we must give it to others inside a certain category. The Treasury brings this out with dreary regularity, not as an argument for extending a reform to a wider group, but as an argument for


rejecting the reform altogether. With these comments, and with profound regret that I have not been able to persuade either Front Bench, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(PERSONS EMPLOYED TO TAKE CHARGE OF CHILDREN OF MARRIED WOMEN WITH EARNED INCOME.)

(1) Subject to the provisions of this section, if the claimant proves in the case of a year of assessment:—

(a) that his total income includes any earned income of his wife;
(b) that he is entitled to relief under section two hundred and twelve of the Income Tax Act, 1952, in respect of a child resident with him;
(c) that a female person is employed by him for the purpose of having the charge and care of the child;
(d) that neither he nor any other individual is entitled under sections two hundred and twelve to two hundred and seventeen of the Income Tax Act, 1952, or section seventeen of the Finance Act, 1960, to relief in respect of the person so employed, or if he or any other individual is so entitled, that the claim thereto has been abandoned;
he shall be entitled to the relief provided for in the next following subsection.

(2) The claimant, in computing the amount of his wife's earned income, shall be entitled to a deduction equal to the amount paid by him, as emoluments in the year of assessment, to the person referred to in paragraph (c) of subsection (1) of this section, or to the sum of two hundred pounds whichever shall be the smaller, provided only that no such deduction shall exceed the amount of the wife's earned income.

(3) In any case in which the wife of the claimant is not required to devote substantially the whole of her time to the duties of a trade, profession, vocation, office or employment the profits of which count as earned income, the deduction provided for in the last foregoing subsection shall be reduced in the proportion that the time actually devoted thereto by the wife of the claimant bears to the whole of the time which could have been reasonably so devoted.

(4) For the purposes of this section income shall not be treated as earned income if it would not be so treated for the purposes of subsection (2) of section two hundred and ten of the Income Tax Act, 1952.—[Mr. Wade.]

Brought up, and read the First time.

Mr. Donald Wade: I beg to move, That the Clause be read a Second time.
The object of the Clause is to remove an anomaly which affects married women who are either full-time or part-time employed and who have children at home. It affects primarily professional people, though it is not limited to any class.
The problem has been raised by the Federation of University Women. I am not sure that there is the same degree of importance in it since the Surtax levels were raised last year, but as I was one of those who objected to the extent of the general Surtax relief and thought it was excessive and that it would have been wiser to have used that amount of revenue to deal with anomalies and hardships, I think that it is reasonable to raise this anomaly tonight.
One of the curious features of our tax system is the markedly divergent treatment of the earned income of married women for Income Tax and Surtax purposes. The problem here arises when the joint income of husband and wife brings the husband into the Surtax bracket. There is much to be said for dealing with the incomes of husband and wife entirely separately. There are many advantages in the proposal that they should not be combined in any circumstances, but this Clause does not go as wide as that. It deals with a much smaller point.
I understand that in the case of the Surtax payer the husband will get his £100 allowance against his Surtax liability but the wife's income, both earned and unearned, is added to his for Surtax purposes. Where that is so and the wife's absence from home necessitates the employment of someone to take charge of the children—and there are occasions when that is perfectly reasonable—it would seem that there should be some tax relief. I shall not question whether it is desirable for married women to take employment. There are cases where it is right that they should do so, and there are oases where it is necessary to employ someone to look after the children. Some women are well qualified to take up employment again as dentists, university teachers, and so on. The object of the new Clause is to grant relief in the circumstances I have outlined where the combined income results in liability to Surtax.
The Clause provides that the claimant must prove that in the year of assessment his total income includes earned income of his wife and that he is entitled to relief under Section 212 of the Income Tax Act, 1952, in respect of a child resident with him. Under paragraph (c) he must show that
a female person is employed by him for the purpose of having the charge and care of the child".
Subsection (2) is important:
The claimant, in computing the amount of his wife's earned income, shall be entitled to a deduction equal to the amount paid by him, as emoluments in the year of assessment, to the person referred to "—
that is, to the person employed—
or to the sum of £200, whichever shall be the smaller "—
so that it will not be in excess of £200
provided only that no such deduction shall exceed the amount of the wife's earned income".
By subsection (3) it is provided that, where the wife is engaged in employment only part-time, the amount of the allowance will be reduced in proportion. That is a fair summary of that subsection.
As I understand it, the new Clause would not involve much loss of revenue. I have not been able to make any calculations, but I imagine that, as a result of the increase in the Surtax level, the amount of revenue which would be lost as a result of acceptance of the new Clause would not be very great. There is an anomaly here which should be removed, and I hope that the Government will accept the proposal I make.

The Economic Secretary to the Treasury (Mr. Anthony Barber): The new Clause proposes, in effect, a new type of allowance for married men whose wives have earnings of their own. The allowance would be given to the husband. If such a married man has living with him a child in respect of whom he receives Income Tax child allowance and he employs a woman to take care of the child, then, under the new Clause, he is to he allowed to deduct from his wife's earnings the wages he pays to the person employed, with a maximum limit of £200 a year. If the wife works only part time, as I understood the hon. Member for Huddersfield, West (Mr. Wade), the idea is to scale down the

full deduction in the ratio which her actual hours of work bear to the time for which a full-time job might reasonably be expected to occupy her.
In practice, this would cause considerable difficulty, but I do not make anything of that point because what the hon. Member is seeking to do is quite clear. The new Clause seems to be modelled on Section 218 of the Income Tax Act, 1952, which provides that a married man who faces single-handed responsibility for a dependent child because his wife is totally incapacitated throughout the year may claim a housekeeper allowance of £75 if he maintains or employs a resident female person to take charge of the child. Under the same Section, a female claimant, for instance, a woman who has been divorced or deserted by her husband, may obtain the same £75 allowance in respect of a resident child-minder if she is in full-time employment or engaged full time in a trade, profession or occupation, or if she is incapacitated. But a man who is receiving a married man's allowance of £240 a year qualifies only if his wife is totally incapacitated. As I understand it, the hon. Gentleman puts forward the Clause on the view that there is an anomaly, a gap to be filled, that is, in the case where the wife is earning.

11.30 p.m.

Because of the extent of the reliefs already given in respect of the earnings of a married woman, I cannot advise the Committee to accept the Clause, because I do not think that the proposal is justified. The Income Tax structure already grants special reliefs in the case of a married couple where the wife is at work. This relief is not limited to cases where there are young children in the home, but rests on the view that, whatever the family circumstances, the fact of a wife's employment throws a burden of expense in one shape or another on the married household which the household would not otherwise bear.

The special reliefs already available to a taxpayer in these circumstances are, first, the wife's earned income allowance of seven-ninths of her earnings, subject to the maximum allowance of £140, and also a second set of reduced rate reliefs. This special relief in respect of the wife's earned income is additional to the normal married man's


allowances and reliefs which are given against the married couple's joint income other than the wife's earnings. The Income Tax advantage which under the present law, without this change, is derived from the special relief in respect of a wife's earnings may already, if the wife's earnings are sufficient, be equivalent to the wiping out of Income Tax at the standard rate on no less than £283 a year of assessable income.

The effect of the Clause, on top of the existing reliefs, would be that in a normal case where there was no question of incapacity and where the parents were sufficiently fortunate to be able to afford a nursemaid there would be relief from taxation in respect of the wife's earned income, which could be equivalent to complete relief from Income Tax on something approaching £10 a week—that is, the existing £283 a year to which I referred a few moments ago, plus the £200 a year involved in the Clause. I must ask the Committee to consider whether the proposed Clause is justifiable.

The Second Report of the Royal Commission, whose Reports were referred to in connection with the last new Clause, was concerned mainly with personal allowances and reliefs. In its Second Report the Commission considered at length the taxation treatment of the earnings of married women. I shall not weary the Committee with long extracts. I want merely to refer to three very briefly. I hope that the Committee will take it from me that, although these are short selected passages, they represent fairly the views of the Royal Commission. Under the heading "Earnings of Married Women", in paragraph 132 the Commission said this:
In our opinion there is a valid difference between the taxable capacity of the married couple where the wife is at work and the married couple where the wife is at home. We adhere to the view that the fact of her employment throws a burden of expense on the married household that it would not otherwise bear. To recognise that this difference does exist for the purposes of taxation is not to ignore the fact that the wife or mother or stays at home to keep house or care for children makes a valuable, though unsalaried, contribution to society. Whether the measure of difference achieved by the reliefs as they now stand is excessive is another question to which we must attend.

Paragraph 133 begins in this way:
Accepting, however, that there must be some difference we cannot avoid the conclusion that the present difference is excessive.
The Commission gave various examples with which I will not trouble the Committee. The final paragraph in this section, paragraph 134, begins in this way:
We think therefore that we must look for some reduction of the special reliefs given to the married couples of two earners.

In the light of the very firm conclusion to which the Royal Commission came that there should be some reduction of the special reliefs, and bearing in mind the extent of the reliefs which are already available and to which I have referred in some detail, I cannot advise the Committee to accept the Clause.

Mr. Wade: I am not satisfied with the remarks of the Economic Secretary that there is no anomaly here. I am inclined to the view that the simplest solution would be to separate the income of husbands and wives entirely for tax purposes. That, however, is not the object of the Clause. I do not propose to press this matter to a Division. I think it has been useful to have this discussion. I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(RELIEF FROM PROFITS TAX FOR CO-OWNERSHIP SCHEMES.)

(1) Where in accordance with a co-owner-ship scheme approved as is provided in this section a body corporate makes an appropriation within the meaning of this section, a sum equal to one hundred per cent. of the amount of the appropriation shall be allowed to be deducted as an expense in computing the profits or gains of the said body corporate for the purposes of income tax and profits tax.

(2) For the purposes of this section a body corporate shall be deemed to have made an appropriation of the amount hereinafter specified in the following circumstances, that is to say:

(a) where a body corporate has applied profits to or towards the paying up of shares in the said body corporate held by persons employed by it, the amount equal to the profits so applies; or
(b) where shares in a body corporate have been purchased at the expense of the body corporate with a view to their resale to persons employed by said body corporate or to their being transferred to such persons and have been so sold or transferred, the amount by which their purchase price is in excess of any value or money paid or given by the employees in respect of such sale or transfer.

(3) For the purposes of this section "co-ownership scheme" means a scheme which is approved for those purposes by the Commissioners of Inland Revenue, and, subject as hereinafter provided, the said Commissioners shall not approve any fund unless it is shown to their satisfaction that:

(a) the object of the scheme is to enable persons employed by a body corporate to acquire on favourable terms and hold shares therein;
(b) the scheme applies generally to persons employed by the body corporate and is not restricted to any particular class or classes of such persons;
(c) the shares acquired under the scheme by persons employed by the body corporate are deposited by such body corporate on their behalf in Employee Savings' Accounts as is provided in section (Tax reliefs and deferment of taxation for Employee's Savings' Accounts) of this Act;
(d) the value of shares so deposited under any scheme on behalf of any individual shall not exceed the sum of one hundred pounds in any year of assessment; and
(e) the scheme contains no provisions in any way restricting the right of any person to hold or dispose of shares already acquired by him under the scheme in the event that he ceases to be employed by the body corporate.

(4) Approval under the last foregoing subsection shall not be withheld by reason only that: —

(a) employees with less than a specified period of service with the body corporate are excluded in whole or in part from the scheme;
(b) employees with more than a specified period of service are entitled to proportionately greater benefits under the scheme;
(c) the scheme provides for the exclusion of persons not required to devote the whole or substantially the whole of their time to the service of the body corporate;
(d) the benefit accruing to individuals by reason of an appropriation is related to the wage or salary earned by them;
(e) the scheme makes reasonable provisions that no person may assign shares in respect of which he has benefited from an appropriation without first offering them to existing shareholders; or
(f) benefits accrue under a scheme only to such individuals as elect to participate in it, provided that, subject to the foregoing revisions of this subsection, employees are generally entitled so to elect and such entitlement is not restricted to any class or classes of employees.

(5) The Commissioners of Inland Revenue may make regulations generally for the purpose of carrying this section into effect, and, in particular, may by such regulations:—

(a) require the body corporate to deliver to the said Commissioners such information and particulars as the said Commissioners may reasonably require for the purpose of this section;

(b) prescribe the manner in which claims for relief under this part of this Act are to be made approved and in which applications for the approval of co-ownership scheme are to be made, and
(c) provide for the withdrawal of approval in the case of a scheme which ceases to satisfy the requirements of this section.

(6) The power conferred by subsection (5) to make regulations shall be exercisable by statutory instrument.—[Mr. Wade.]

Brought up, and read the First time.

Mr. Wade: I beg to move, That the Clause be read a Second time.
I shall not be able to deal with this new Clause quite so briefly as I dealt with the last. The object is to facilitate the introduction of co-ownership schemes. I do not pretend that this Clause by itself would alter the whole pattern of industrial relationships. It is only one part of a very much wider policy with that far-reaching aim of altering the existing industrial set-up.
This is one of two complementary Clauses which are designed to remove some of the obstacles in our taxation system which tend to deter firms from introducing co-partnership schemes. This Clause deals with the subject primarily as it affects an employing firm. The other new Clause, which is not before the Committee at the moment, was discussed on the Committee stage of the Finance Bill in 1958 and deals with the problem from the point of view of the employee.
Before referring to this Clause in detail, I should like to point out some of the reasons for advocating co-ownership. The essence of the idea is co-partnership. With that in view, we are in favour of employing shareholding. This involves a great deal more than the shaming of profits. Co-ownership involves the sharing of responsibility, the shaming of profits where they are to be shared, and the sharing of ownership. It is fair to say that the Liberals have travelled a dong way since the days when profit sharing was regarded as a method of distributing bonuses to employees by paternalistic employers without any prior consultation with employees.
I think that we learned much from a study of this subject and I think that we have gained much from experience. For example, we do not for a moment advocate the mere sharing of profits. We are


also well aware of the dangers of recommending employees to put all their shares in one basket. I dealt with that on a previous occasion in a debate on this subject in a Committee stage on a Finance Bill. It is possible to have shares, not only in the firm in which one works, but also in other firms so that the risk may be wider spread.
The ultimate aim is clear. Britain cannot afford to go on with industry divided into two sides with conflicting interests. If we are against further nationalisation as a panacea—and I am one who is opposed to the policy of further nationalization—I think we must have some alternative. I think this is the right alternative.
It is an alternative not only to Socialism but to old-fashioned capitalism. Of course, capital is necessary and industry cannot be carried on without it, but we have gone past the idea that capital employs labour. I regard that as an out-of-date concept, and I look forward to the day when management and employees working together in partnership will employ capital. That is the right attitude.
Employees' shareholding is in keeping with this more modern concept of capitalism. There is no one simple blueprint for all forms of employees' shareholding. There is a wide variety of different schemes suited to the different conditions of different industries and different firms. But I have detected a tendency for these schemes to be adopted mainly by the very large concerns which have the benefit of expert advice, sometimes obtained at considerable expense.
It is reasonable where, after consultation with the employees, a firm decides to issue shares to employees and give dividends on them, to consider how those payments should be treated for taxation purposes. Should the payments be deductible before arriving at the net amount on which Income Tax and Profits Tax are paid? That is the kind of problem which faces any firm introducing such a scheme. It is a complicated subject and smaller firms are often put off by its complexities. It is easy enough for the big firms. There are ways of overcoming the difficulties and

they have been overcome. The fact that I.C.I. has a very successful employees' shareholding scheme is evidence of that.

Mr. Callaghan: Is it?

Mr. Wade: I think that it is reasonable to say that it is a successful scheme. I understood that the Leader of the Opposition said that it was working very satisfactorily, or words to that effect.

Mr. Callaghan: As the hon. Gentleman says that it is successful, does he know how many shares are sold by employees on the day of receipt, or within seven days, or a month thereafter?

Mr. Wade: My information is that a large percentage are retained.

Mr. Callaghan: My information is that a large percentage are sold.

Mr. Wade: Perhaps I may briefly quote from the Liberal Party's research department which, referring to the I.C.I. scheme, says:
… a short time before the actual handout many city gamblers sold, on the assumption that the majority of the workers would rush to sell shares and prices would drop considerably. But there was no wild rush to sell. Two of the I.C.I. men gave their reasons. 'To me the shares are a good investment. It's always handy to have something like that by you, in case of emergencies',
The other said:
Unless you need the money desperately it is pointless selling something that can provide you with security later on in life.
I do not wish to pursue that but merely make the point that there is evidence to show that where the shares are issued to employees, the majority are retained.
If the tax difficulties are to be overcome, the first step is a specific recognition in the Finance Bill of co-ownership, and that is the first purpose of the Clause. The second is to make it clear that profits set aside for the acquisition of shares for employees, or for the issue of bonus shares to employees, should not be treated any less favourably than ordinary cash bonuses in the form of additions to wages or salaries. Surely such a scheme is in the nation's interests, for it is a form of saving and in some ways is preferable to mere cash bonuses.

11.45 p.m.

The object of the proposed new Clause is to lay down certain definitions and limitations. I think it would be accepted as reasonable, if we are to have co-ownership defined in the Finance Act, that there should be some limitation and some attempt at definition. This, of course, would not rule out a variety of schemes which might come within the definition; but these should be a definition to show that we are concerned with genuine and appropriate schemes, and not a few "top hat" schemes, designed to serve only a few people.

I should like to refer to the actual wording of the Clause. The first section deals with the amount to be deducted.
. as an expense in computing the profits or gains of the said body corporate … 
for the purposes of Income Tax and Profits Tax. Section (2) provides for the circumstances in which this shall apply, and an appropriation is defined in the following words:
where a body corporate has applied profits to or towards the paying up of shares in the said body corporate held by persons employed by it …
and secondly,
where shares in a body corporate have been purchased at the expense of the body corporate with a view to their re-sale to persons employed by the said body corporate or to their being transferred to such persons and have been so sold or transferred … 
to the employees. I am trying to summarise a rather lengthy Clause, and this first part is the definition of an appropriation.

Now we come to the limitation provisions. This is dealt with in subsection (3) (a), which states that
the object of the scheme is to enable persons employed by a body corporate to acquire on favourable terms and hold shares therein".
That is one of the conditions which must be fulfilled if the scheme is to be accepted for our purposes, and the next subsection makes it clear that the scheme is not restrictive; that it shall apply not merely to any particular class or classes of persons in a firm.

I will omit mention of the details in subsections (c) and (d) because they are related to another Clause not before the Committee. I hope that the Economic Secretary will not make too much heavy weather of that, because the

purpose of that other Clause is to grant relief to employees who receive the shares; and that is not covered by this particular Clause.

Subsection (e) makes it clear that there is no restriction on
…the right of any person to hold or dispose of shares already acquired by him under the scheme in the event that he ceases to be employed by the body corporate".
There should not, we feel, be a restriction on sales of shares. In practice, the majority of employees do not sell, but we do not think that there should be a restriction on selling if an employee so wishes. There are certain specified grounds on which approval should not be withheld. It should, for example, not be withheld by reason of the fact that
employees with less than a specified period of service … are excluded in whole or in part from the scheme
and it is made clear that there are proportionately greater benefits for those employees with more than a specified period of service, and that the benefits accruing to employees by reason of an appropriation is in proportion to the wage or salary earned. The scheme makes the reasonable provisions that no person may assign shares in respect of which he has benefited, without first offering them to existing shareholders, and that benefits should accrue only to such individuals as elect to participate. I think that is reasonable. Finally, there are some provisions that the Commissioners of Inland Revenue may make regulations. I am not particularly enthusiastic about regulations, but I think that provision is necessary in this case.

I apologised for dealing with this matter at some length, but I think that if we are going to incorporate this principle of co-ownership into our Finance Acts it is necessary to have some definitions, and those I have tried to provide. The main point is that we wish to make quite clear that where profits are used in providing shares to employees, either through their buying the shares, or through shares being transferred to them on favourable terms, by issuing bonus shares or by whatever method, that shall be deductible in arriving at the amount of Income Tax or Profits Tax payable by the company issuing the shares. In other words, this


should not be treated less favourably than the ordinary cash bonus. That is the main thing. The other thing is that the principle of co-ownership shall be recognised in our Finance Acts. I again apologise for taking a rather long time in developing this somewhat complicated new Clause, but I hope it will be considered favourably.

Mr. Darling: As the hon. Member for Huddersfield, West (Mr. Wade) has said, we discussed this Clause two years ago, and it will be necessary, if we are to deal with it at any length—and I am not—to repeat many of the arguments which were used then both for and against it. It will be within the recollection of the Committee that on that occasion the Clause came in for some rather severe but not altogether unfriendly criticism. The right hon. Gentleman the Leader of the Liberal Party on that occasion himself admitted that the Clause may have been badly drafted. I thought then that it was badly drafted. I still think it is badly drafted, and I am astonished that the Liberal Party has made no attempt in the meantime to meet the genuine criticisms which were then levied against the Clause both on its purpose and the way it was drafted. Instead of trying to improve it, the Liberals have put forward the same Clause again.

Mr. Wade: Would the hon. Gentleman say to which year he is referring? —because there were two Clauses tabled. One Clause was discussed and certainly criticised, but the Clause I have now moved, although tabled then, was not called and was not discussed.

Mr. Darling: I am sure that the hon. Member is making a mistake.

Mr. Wade: It depends on which year.

Mr. Darling: I am talking about two years ago—1960. If the hon. Member looks at HANSARD for 22nd June, 1960—col. 511—he will find this Clause—Relief from profits tax for co-ownership schemes—word for word as it is now.

Mr. Wade: I was referring to 1958.
Mr. Darling: I said two years ago. As I say, the right hon. Gentleman the Leader of the Liberal Party said the

Clause was badly drafted, and I repeat that I am surprised that that party has not tried to improve it.
When hon. Members on the Liberal bench discuss co-ownership in this Committee they are usually very cautious in their statements and the claims they make for co-ownership, and they do not repeat some of the claims they make outside. They turn down the picture of co-ownership they offer to the public when they explain it to us. Even so, some of the claims which were made in the debate two years ago and which to some extent have been repeated by the hon. Member for Huddersfield, West tonight seem to me to be rather fulsome. The Leader of the Liberal Party said two years ago that co-partnership schemes would encourage more production in industry, would improve industrial relations and would share out more fairly the proceeds of private enterprise.
I do not think, personally, that distributing shares to employees will by itself do any of these things, and I do not believe the right hon. Gentleman thinks so, either, but that is no reason for opposing employee shareholding. Indeed, the right hon. Gentleman said that co-ownership is no substitution for consultation and
no substitute for a much firmer recognition of the status of labour throughout industry".—[OFFICIAL REPORT, 22nd June, 1960; Vol. 625, c. 524.]
The hon. Member for Huddersfield, West said tonight that co-ownership is only one contribution which they wish to make to improve industrial relations.
But, as I said, these claims are different from those which they make outside, and one of the claims made for co-ownership ought to be brought to the Chancellor's attention, because the Liberals have a far better solution to the wages problem which is worrying the Chancellor in this leaflet on co-ownership and profit sharing which they issued. Pt is called "A Challenge to Trade Unionists", and in it they make the claim—and this is what the Clause is designed to encourage—
Under co-ownership and profit-sharing the need to demand frequent wage increases would cease.
In other words, if in certain industries the employees were given shares whenever they asked for a wage increase,


they would stop asking for wage increases.
But I have worked out some figures of typical firms about the amount of distribution of profits which could possibly go into shares to employees or any other form of bonus, and in no case as far as I can see is it possible out of the profits of the firm to give anything like the wage increases which many trade unions today are demanding—legitimately from their point of view and that of the productivity of industry. Whether the increases should be paid is a matter for discussion. But as far as I can see no firm in this country is in a position to put aside wage increases by issuing shares to their employees.
I do not want to go into the figures because the hour is late, and I will confine myself to one or two general criticisms of this form of co-ownership. Let me make it clear that we are not opposed to firms sharing profits with their employees. Some of us, encouraged by my right hon. Friend have been making a wide study of the question, and we believe that we should provide in a new or amended Companies Act proper legal provision for employees to participate in the sharing out of companies profits. But we wish to see that the employees' part of the profits is paid out in whatever form they decide—in cash, in the pay packet or in collective welfare schemes, or whatever it is—and we should look carefully at the idea of a company paying out, without pay consultation with them, in the form of shares. This Clause, providing for payment in shares, is open to abuse, and it does not protect employees from all the abuses in which some firms might indulge. Nor are we opposed to employees holding shares in the firms for which they work. The hon. Member for Huddersfield, West suggested that in order to spread the risk employees might hold shares in other companies, too. How this gives them a better stake in their own company I do not know.
But we must, as we have done before, warn employees who are faced, so to speak, with these suggestions of taking part in share distribution schemes of the dangers of investing both their labour and their savings in the same firm. One of the reasons why I do not think that,

if it were passed, the Clause would encourage employers to go in for share distribution schemes on the scale that the hon. Member thinks would happen is that many employers share this view and want never to be in the position of having to tell a workman that not only has he lost his job because there is no work for him but that his shares have taken a tumble on the Stock Exchange and are practically worthless. Those two disasters usually come together in periods of economic difficulty. Therefore, we say it would be grossly unfair to them to risk both their jobs and their savings in one organisation.
We differ from the Liberal Party, therefore, on this basic principle. They say in their propaganda for co-owner-ship, even if they do not say it so forthrightly here, that to gain a better status in industry the employee must become a shareholder in his company, that that is a condition that he must accept before he can have a proper share in the management of the firm. Our view is that he should be brought into the management by virtue of his employment, by the fact that he is employed by the firm, and that by belonging to it he has certain rights, which, in our view, should be spelt out in an amended Companies Act or a new one, depending to some extent on what the Jenkins Committee will report. I do not want to go into detail about that, and I suppose I should be out of order if I did, but that is the view that we take.

12 m.

I have mentioned the argument about spreading the risks. Let me as briefly as I can just offer one or two more critical views, again in a friendly fashion. Even under the most generous employee shareholding schemes that I can consider, the employees will always be minority shareholders. Indeed, in many firms the chances of the employees for many years collectively having any substantial stake in the company is very small.

It is argued in the literature which the Liberal Party has put out that the employee shareholders would be able to attend company meetings—if the firm gave them time off to do so, of course. But our view is that they would have a far more effective voice in the firm's affairs if the directors and the managers had to attend employees' meetings,


which is what an increasing number of progressive firms now arrange.

The Temporary Chairman (Mr. W. R. Williams): I think we shall have to keep to the merits of this co-ownership scheme and not deal with too many alternatives to it. That would be the better course.

Mr. Darling: I agree, Mr. Williams, that one ought to stick closely to the letter of the scheme. The purpose of the Liberal Party behind it has been in the remarks that I have been making, but I will stick closely to the letter of the scheme.

The Temporary Chairman: I want to make myself clear. The hon. Gentleman can deal with this scheme, but I do not want him to deal with any alternatives, because there could be a hundred and one alternatives. We do not want to do that at this time of the morning.

Mr. Darling: I think I have earned that rebuke, Mr. Williams.
I will just ask one or two questions which relate particularly to the new Clause we are discussing. No reference is made in it to the fact that the shares distributed under the scheme must be shares which carry voting rights and are equal to all the other shares issued by the company. It is possible under the scheme for special second-grade shares to be distributed to employees, carrying perhaps a low rate of interest and no voting rights, and yet the firm would still be able to get the tax relief provided for in the Clause. This is a criticism that we made before, and I am surprised that the mover of the Clause has not amended it in order to cover the point. I appreciate that if he had insisted that the employees' shares must carry voting rights and must not be limited in any other way he would have been compelled to criticise some firms that he now praises, because some carry these restrictive, second-class shares for their employees.
On a more general point, we know from experience that to operate a successful profit-sharing and share-ownership scheme, such as that suggested in the Clause, a firm must fulfil certain conditions. It must have a steady demand for its products and must be able to maintain a high level of employment

year in and year out; otherwise the scheme will be bedevilled by a high labour turnover. It must operate at a high capital cost and a relatively low labour cost; otherwise the margin of profit in relation to the wages bill will not allow it to offer anything like a reasonable share distribution, and it must have a good record of industrial relations; otherwise the scheme will meet with suspicion and hostility.
Not only are there relatively few private firms that fulfil those conditions; to begin with, about half of our 23 million employed persons would be rubbed out at the start, because they are engaged in public industries and possibly in services in which there are no private shareholders.
There is another point which I do not wish to labour too much, because I brought it up on a previous occasion. I cannot understand why the Liberals ask for tax relief for companies that are registered under the Companies Act for share distribution schemes and refuse to give the same relief to enterprises which are registered under the Industrial and Provident Societies Acts. The two firms pay the same rate of Profits Tax.
Although the hon. Member for Huddersfield, West says that the Clause and what lies behind it gets away from paternalism, all the words in the Clause add up to a dressed-up version of nineteenth century paternalism. The whole conception is years out of date. We say that the workers should be allowed to share in the profits, as provided by the Clause, but that they should have a bigger and better share to put into their pay packets, which is
where it should be. Encourage the workers to save, by all means—and this might be stimulated by the Clause—and open savings accounts for them, as many firms do, deducting the savings, by agreement with the employees, from the wage packets. Let them put their money into unit trust shares or co-operative society shares. But let the workers decide for themselves where they will put the bonuses out of the profits which, by their enterprise, they have helped to earn.
I have spent a large part of my life observing and reporting on industrial affairs. I can understand what the mover of the Clause wants to


achieve. He wants to give the workers a bigger stake in the management of the industries in which they work. I agree with that. But I say, from my experience, that I am confident that there are scores of thousands of wage earners and salary earners who could make a really good and constructive contribution to the management of our industrial and commercial enterprises, large and small, and that our industries are all the poorer for shutting them out of the board rooms.
We want them in. We want there to be a common recognition of their right to be there as representatives of their fellow workers. That is the sole right that we accept. We shall oppose any element of conditioning of that right by imposing such qualifications as shareholding. Therefore, for those reasons of principle; for the reason that the Clause is still badly drafted, because it does not meet the criticism brought against it two years ago and today; because it excludes employees whom it is supposed to benefit from consultation about the terms of the share distribution schemes and the management of such schemes, I hope that the mover will seek permission to withdraw the Clause and will try to put his profit-sharing ideas into more practical shape.

Sir E. Boyle: As hon. Members have said, the Clause is an old friend to at any rate those of us who have experienced these debates over a number of years. It has been put down on several occasions and was debated in 1958 and in 1960. In previous years it has been linked with another Clause and the two together represent a complete scheme for encouraging wider ownership of industrial shares. This year only one Clause has been put down, but, as the hon. Member for Huddersfield, West (Mr. Wade) pointed out, it refers in line 28 to another Clause which has not been put down.

Mr. Wade: There is no special significance in the fact that both Clauses are not on the Paper this year. It was simply my hope that this particular Clause would be debated this time.

Sir E. Boyle: I was not saying that with special intent. I was simply stating the fact.
The Clause deals with the tax treatment of a company which sets up what is called a "co-ownership scheme". The Clause which has normally gone with it, but has not been put down this year, dealt with the position of the employees and provided certain special relief. I should, however, be out of order if I dealt with the proposals in that second Clause and I must confine myself to what is proposed in the actual Clause that is before us.
This Clause provides for a tax deduction to he given to a company which makes what is called an "appropriation". Two kinds of cases are envisaged. The first case is where a company applies profits to the paying up of shares held by employees. The second is where shares already issued are purchased for the benefit of employees.
The question of the tax treatment of provisions which a company makes to enable shares to be acquired by its employees is of course rather complicated. I do not think that the Committee would regard it as necessary for me to go into this matter in detail, but I would like to remind the Committee that in 1955 Ministers announced that companies which wished to set up co-partnership and profit-sharing schemes for their employees could consult the Inland Revenue which would do its best to help them by explaining the treatment which it would regard as appropriate under the existing law in any particular set of circumstances. That was at the time an important step forward. Many hon. Members will remember the curious economic debate we had in June, 1955. by way of being a debate on an Amendment to the Address, which turned out to be a debate almost entirely on the subject which we are now discussing, in the unaccountable way things sometimes happen.
I understand that considerable use has been made of this facility and that the Inland Revenue has received quite a number of inquiries. As a result of the information which the Inland Revenue has given, most companies have found it possible to adopt arrangements under which they get a deduction in computing their profits for the provisions which they make to enable their employees to acquire shares.
Perhaps I may give an example. Suppose a company institutes a scheme under which it pays for the benefit of employees a profit-sharing bonus and the proceeds, after deduction of the employees' appropriate tax, are used by the employees to take up shares in the company at current market value. A bonus of this description is under existing law a deductible expense in computing the company's profits. That should be put firmly an the record in view of the number of times we have debated this issue on Finance Bills. The result is that most companies find little difficulty in securing under existing law a deduction for the provisions which they make for their employees under profit-sharing schemes.

12.15 a.m.

It may be true that the Clause we are now discussing goes somewhat wider than the existing law and would provide for a deduction in certain cases not at present covered. I accept, for instance, that the existing law does not give relief for the loss of money which a company incurs if it issues shares to employees at par when they could command a premium in the market. But, whatever view may be taken about the merits of those cases for which relief is not given under the existing law, I must say—I hope that the Committee will agree—that it would be wrong to complicate the Income Tax Acts still further and set up an elaborate procedure for giving relief to companies which can already secure relief under our existing arrangements in drawing up their schemes.

There is a further point. I do not know whether the hon. Gentleman and his hon. Friends envisage that the provisions for relief which the Clause contains should be exhaustive so that a company would not be entitled to a deduction for any expense incurred in connection with a profit-sharing scheme unless it satisfied the elaborate conditions laid down in the Clause. If that were the intention, it would mean that some existing schemes might have to adapt themselves so that they could satisfy the conditions laid down. On the other hand, if that were not the intention, we should then have the curious position that some profit-sharing schemes could get relief unconditionally and

others had to go through an elaborate procedure for getting approval. I think that that would be a very unsatisfactory state of affairs either way.

For those reasons, I suggest that the present position is not unsatisfactory here. The Committee would not be well advised to accept the new Clause, which would merely complicate the situation without, I suggest, sufficient merit.

I accept that this is an important subject. It is right that we should from time to time give attention to it. I rather agree with the hon. Member for Sheffield, Hillsborough (Mr. Darling) When he says that hon. Members below the gangway opposite sometimes say rather more on this subject when speaking in the country than they would be prepared to say in the House of Commons. If I may say—I hope that this will not strike hon. Members as either flippant or an unfair comparison— I am sometimes reminded, when I hear members of the Liberal Party talking about co-ownership, of what I call a rather home-made, local book on a new system of contract bridge, the author of which says, in effect, that if only his system had been used by all the experts a great many of the bad contracts would never have been got into at many of the great bridge congresses. One sometimes doubts these assertions.

Obviously, this proposal is important within its limits, but I have never been able to convince myself that co-owner-ship is something which could, somehow, obviate or offer us an easy escape from the tensions which, rightly or wrongly, I regard as inevitable in a modern industrial society. There is no short cut out of these things. There is bound to be a certain amount of tension, as I see it, in any modern industrial society. The great aim is to see how to ride the situation and how to harmonise everything for the goad of the community as a whole.

Looking at this question of co-ownership and the present legal position, I do not think there is a case for altering the law as hon. Members below the gangway opposite have suggested. I listened with interest to the very careful exposition of the hon. Member for Huddersfield, West. We all know his sincerity and interest in these matters.


but I must advise the Committee to reject fie new Clause.

Mr. Arthur Holt: I listened with interest to what the Financial Secretary had to say. It is intriguing to think that, whenever my hon. Friend the Member for Huddersfield, West (Mr. Wade), my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) or I myself have been speaking in the country, there at the back of the hall, carefully disguised and incognito, has been the Financial Secretary to the Treasury listening to us making passionate speeches to the effect that the whole answer to the problem of industrial relations and the improvement of industry generally lies in co-partner-ship or co-ownership. This idea is nonsense, of course.
I can only say to the hon. Member for Sheffield, Hillsborough (Mr. Darling), who made the same kind of accusation, that if he had read not only the leaflet which he has there but the many documents which over the years have been issued by the Liberal Party, he would have known that the ideas given expression in this new Clause are only a part of our proposals for improving the atmosphere in industry, the fairness with which the cake is distributed, and so on. As to status, I agree that probably the biggest contribution to improving status and fostering the feeling that employees are being properly treated in this modern age is not co-ownership and similar schemes but the improvement of their conditions of service.

The Temporary Chairman: Order. That might be very interesting, but the hon. Member is deviating from the Clause. I should like the hon. Member to get back to the Clause.

Mr. Holt: I appreciate your point, Mr. Williams. I was only trying to answer some of the points which have been made. I am sure that you will appreciate that I could go on and demolish the case which has been made against us on this aspect of the problem.
The whole purpose of the proposal is to provide the conditions about which the hon. Member for Hillsborough was so concerned when he said, "Let the employees decide." Our point is that conditions are not equal as between

bonus distribution and distribution of shares. We wish to make them equal from a tax point of view. Then, if £10 or £20 is available for distribution to an employee, he can say whether he will have it as a bonus or as a share in the company. All we have repeatedly said about the present tax position is that at the moment if a share distribution is done in the simplest way, and not in ways which I agree that the Treasury is trying to assist people to do, tax will be paid on the amount distributed.
The Financial Secretary said that most companies now find little difficulty, or words to that effect. That may be so, but some companies still find difficulties. If it is accepted in principle that it is a good idea to encourage this process, so that at least employees may have a choice on an equal basis between bonus or shares, it is the job of the Government not merely to leave the position as it is, with little difficulty for most companies, but actually to remove the difficulties completely and go over to the other side, just as the Government now reduce the amount of tax chargeable, for instance, on small savings. They make reductions in taxes for people who go in for endowment schemes. We are not asking for anything positive in favour of co-ownership schemes. We merely ask that the existing obstacles be removed.
The Financial Secretary referred to the debate on the Gracious Speech in 1955. Sir Anthony Eden, the then Prime Minister. discussed the question of developing this scheme. There has been very little from the Government of a positive nature since then. I do not accept that the drafting points mentioned by the hon. Member for Hillsborough are of material concern, but if the Government do not like the scheme in general it is incumbent upon them to put before the Committee something substantial as an alternative.

Mr. Wade: I do not think that anyone on these benches or outside has ever suggested that there is an easy shortcut out of all our industrial difficulties. I certainly have never suggested that, but I believe that a widespread adoption of co-ownership would have far-reaching consequences. The Financial Secretary said that most firms found no difficulties and benefit greatly from the advice his officials are able to provide. That does


not tally with the information I have received from time to time. The difficulties seem to create a genuine obstacle to the more widespread adoption of these schemes, particularly by smaller firms. I recognise that nearly half-past midnight is not the best time to pursue this debate at great length. I hope we shall have an opportunity on many more occasions of raising this subject until we achieve what we desire. In the meantime, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(DEPLETION ALLOWANCE FOR UNITED KINGDOM MINERALS.)

Subsection (1) of section three hundred and five of the Income Tax Act, 1952, shall be amended by the insertion, at the end of paragraph (b) of the following words "or

(c) on the acquisition of, or of rights in or over, the deposits"; and by the repeal of proviso (ii) of the said subsection.

Provided that no company or person shall by virtue of this section be liable to pay any more tax than that person or company would have been liable to pay if this section had not been passed.—[Mr. Farr.]

Brought up, and read the First time.

Mr. John Farr: I beg to move, That the Clause be read a Second time.
The last time that a new clause similar to this was debated was during the Committee stage of the Finance Bill, 1958. Then my hon. Friend the Member for Essex, South-East (Mr. Braine) introduced a new Clause on somewhat similar lines, but with a more detailed application. When so ably moving that new Clause, my hon. Friend ran into difficulties with hon. Members on both sides of the Committee when it was found that there was a violent difference of opinion as to the exact date on which it should become effective. My hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) complained that he wanted a much earlier date than that proposed by my hon. Friend the Member for Essex, South-East. Several hon. Members on both sides of the Committee complained that they wanted a date earlier than the enactment of the 1958 Bill.
My right hon. Friend the Paymaster-General, in his response from the Treasury Bench, said that the issue to be de-

cided by the Committee was one of principle. He went on to say that, in view of the conflict of opinion among members of the Committee, expressed that night as to whether the new Clause should operate from the enactment date or from some past date, the Chancellor, while recognising the weight of the case which had been submitted to him, felt unable at that time to accept the Clause.
This new Clause tabled by hon. Members on both sides of the Committee and myself has been deliberately cast in wide terms so that the Committee can arrive at a decision on the principle involved which was referred to five years ago by the Paymaster-General. It has met with a very wide measure of support. No fewer than fifty-eight hon. Members on both sides of the Committee had added their names to it by 11 o'clock this morning.

12.30 a.m.

The present position is that United Kingdom operators are not granted any capital allowance on acquiring freehold rights in United Kingdom mineral deposits. At this late hour I shall only briefly submit a few reasons why a depletion allowance on these rights is only just.

The first is that the first Tucker Committee and the Royal Commission on the Taxation of Profits and Income, which reported in March, 1955, both concluded that there was no longer any case for the refusal of a depletion allowance and recommended that the allowance should be given. Furthermore, the Royal Commission found that the present basis upon which such taxpayers' profits were taxed was inaccurate and caused inequality of treatment for taxation purposes between them and the rest of manufacturing industry, so producing injustice.

The second reason is that the Finance Act, 1949, granted a depletion allowance for foreign minerals, and the Royal Commission of 1955 commented that in its view there was no material distinction between minerals which were indigenous to the United Kingdom and those which were not, and that the real question involved was the computation of taxable income.

The granting of depletion allowances to freehold operators would iron out a further anomaly. At present leasehold


operators of minerals in the United Kingdom can charge their annual royalty payments against taxable profits, but no corresponding annual allowance is made to those companies which have been prudent enough to acquire freehold deposits.

In case hon. Members should be misled into thinking that there are only a few quarrying concerns which are affected by this injustice and that the majority of operators are leasehold operators, lot me quote a table of figures which shows that in England and Wales last year, for every three tons extracted from our quarries, two tons came from freehold operators and only one ton from leasehold operators.

At this very late hour I do not want to delve too deeply into a point concerning cemetery companies. Suffice it to say that by virtue of the Finance Act, 1954, cemetery companies are permitted to treat their land as a wasting asset. Cemetery companies sterilize—perhaps one should say that they mortify —their land for an indefinite period, exactly as do quarrying companies. The principle of tax allowances in respect of capital which is used in the course of earning a profit came fully into effect in the Finance Act, 1945. The mineral operator who is a freeholder of his minerals has spent capital for which he can claim allowances in respect of the plant and equipment necessary to operate his quarry, but the enterprise from which the profit may arise is not complete until such time as he has spent further capital in acquiring the mineral assets. Plant and machinery and minerals are all necessary capital expenditure to produce the enterprise and all should qualify for a depletion allowance.

A fair date from which a depletion allowance should operate would be in respect of rights acquired since the bringing into operation of the Town and Country Planning Act, 1947, in respect of unworked minerals. Tonight I deliberately wish to keep the debate on a fairly wide base and do not want to make the date a point of issue. I merely wish to obtain the approval of the Committee to the principle that this anomaly should be removed and that no longer will these freehold operators be charged on a sum which does not

represent at all, but which exceeds, their true profits.

Dr. King: It was in 1956 that some of us first raised the question we are discussing this morning; so, for some seven years hon. Members on both sides of the Committee have been pleading the case of certain extractive mineral industries, and particularly the sand and gravel industry.
I believe that the case is a simple one and that it is a case of simple justice. If an industry buys raw material and works it, then its profits are obviously calculated after offsetting the cost of those raw materials purchased. If the raw materials are worked from land on a royalty basis, then the cost of the royalties, too, must be shown in the accounts before a true profit is reached.
If, on the other hand, a firm buys land containing the minerals which it is to extract there is at present no provision for it to offset against its profits the fact that it is, year by year, steadily using up the mineral assets of its land. After some years the supplies are worked out and sand and gravel companies, who buy land for the sand and gravel it contains, have a capital asset which wastes away; and in the case of sand and gravel it wastes away very rapidly.
It would be wrong if they were allowed to charge against the normal profits the whole value of the land plus the minerals which it contains, since, when all the minerals have been extracted there is the residual value of the land. But if the value of the land after it has been worked were subtracted from the cost of the land plus its minerals and the net cost were divided by the number of years for which the land was worked, it ought to be possible to arrive at a true figure giving the annual cost of the 'wasting asset. If this were set against the annual profit, the true profit made would be arrived at, and tax could be paid on this.
Two eminent committees have recommended this practice. First, the Tucker Committee on Trading Profits, in 1951, said:
The operating company's profits are not properly computed unless it receives an allowance based on the full amount it has expended on the acquisition of the minerals.


The Royal Commission on Taxation—to which I have earlier in this debate paid a tribute—stated in 1955:
That in future a depletion allowance should be given in respect of the cost of acquisition of mineral rights or areas 
and went on to say,
The basis of relief should be the actual cost less any residual value of the land at the close of working".
This method of arriving at a true profit for an extractive industry has already been conceded since 1952 by the Government for extractive industries overseas. It is a matter of simple justice for the Chancellor now to apply it to similar industries in this country. I believe, therefore, that it is a matter of simple justice which the Chancellor should at long last ensure.
When we raised this question in 1956 the Treasury told us it was still examining the matter. When the Committee discussed it in 1958 I happened to be in the Chair and could take no part in the discussion, but from the OFFICIAL REPORT I can take an objective view of what took place. The issue was a very complicated one. There was some struggle, which I must confess I did not understand, between the Federation of British Industries on the one hand and the group of extractive industries on the other. It was largely about the date to which any concession such as we seek in this new Clause should apply. That evening the Treasury was in the happy position of playing off one group against the other, and it said that, as the Committee was divided, it did not have to express an opinion at all, and it was in the happy position of having to take no decision that evening.
I understand, however, that during the past two years the various industries concerned have hammered out their differences and have arrived at some compromise solution. When we put down last year a new Clause similar to this it had the support of many Members on both sides of the Committee, and believe that had it had the good fortune to have been called it would almost have demanded from the Treasury a positive reply.
Obviously we cannot expect the Government to accept at this stage of the Finance Bill the new Clause which we are proposing. Obviously there are still

difficulties to iron out. Obviously, there must be a cast-iron system which would satisfy the Treasury when it is working out the true profit. Nobody in this Committee would seek to secure for the extractive industries a tax concession to which they were not morally entitled, There must be safeguards against collusive sales, and the Treasury has the right to demand the fixing of the date. These are matters which I believe can easily be solved by the Treasury which I believe to be the most competent in the world.
So I hope that, either from the Chancellor or the Financial Secretary, we shall have some indication tonight that at long last the Treasury concedes what I regard as the elementary justice of the case which this group of extractive industries is making for a tax concession. No Government have the right to take from an industry a profit which the industry is not making. The Government have the right to tax only the true profit. That is the principle we are asking the Treasury to accept.

Mr. Edward du Cann: I entirely agree with all that has been said by my hon. Friend the Member for Harborough (Mr. Farr) and by the hon. Member for Southampton, Itchen (Dr. King). I agreed more particularly with the hon. Member for Itchen when he said that this was a matter of simple justice. That is why, even at this hour of the morning, a number of us are seeking to catch the eye of the Chair and to make the point that we feel strongly upon this issue.
As has already been remarked, it is not the first time the Committee has debated this matter, and I shall not try in any way to rehearse the arguments. In general the point which is being made is that the present situation is anomalous and is unjust. That is completely true. It is even more anomalous than has so far been suggested, for my researches lead me to believe that all the European countries at any rate, and, I believe, many others as well, do allow some form of depletion allowance in the case of freehold workings on land which has been used for extractive purposes, and bearing in mind that we are to debate the great Common Market later today, it seems particularly appropriate to remind the Committee of this point, as


we enter into a more competitive world. But that apart, other things require to be said.
In brief, the Royal Commission as long as eight years ago conceded this as a matter of equity. The subject has the broad support of both sides of the Committee and the new Clause has attracted no fewer than 58 signatures—a very large number. I am sorry that my hon. Friend the Financial Secretary has been described in such a way by the Liberal Party, but they almost invariably get things wrong, whether they are talking inside or outside the Chamber.

12.45 a.m.

I emphasise as strongly as I can that many of us feel extremely keenly about this question, for when we consider how basic these industries are to the British economy—the sand, gravel and cement industries—surely it must be right that the Committee should say to them, "You will have a fair deal in matters of taxation". Our complaint is that they do not receive it.

It must be right for us to have regard to cost. This is a matter into which a great deal of research has been done recently, and I can tell the Financial Secertary, who has taken a deep interest in this subject over a long period, that we believe it unlikely that the concession would cost more than about £1 million a year.

I do not regard that as a large sum for the Committee to vote by way of equity, but whatever one's view on that matter, the hon. Member for Itchen touched on the drafting of the Clause and rightly made the point that it would be unreasonable to expect the Chancellor to accept it in its present wide form. That is true, but it raises the contrary arguments which have not been debated. Many possibilities of collusive sales and other matters are raised, but it is correct to say, as the hon. Member for Itchen pointed out, that the industry themselves are now agreed completely on what they want and that there is no reason why, given a little attention and hard work, matters of that sort could not be resolved in a friendly atmosphere.

That being so, there seems no reason on earth why the Government should not accept the principle of the Clause. I hope that the Financial Secretary, in

whom I have every faith—I always have had and no doubt shall have for a long time—will concede the principle and will give an assurance that the matter will continue to be considered by Governments but, if I may respectfully suggest it to him, considered more favourably and more quickly than hitherto.

Mr. Mitchison: In the sense in which I understand the Clause to have been moved, I think that I can support it. I have read the circular which has been sent out, "The case for depletion allowances". I understand that the Clause has been moved to ascertain the Government's intentions and with a view to getting some advantage not in this but in some subsequent Finance Act.
It is time that the Government came clean on the matter. There are the recommendations of two Commissions —the Tucker and the Radcliffe Commission—and they both considered that there was a case for a depletion allowance, and I understand that they both made recommendations to that end. So far so good, but in asking the Government to declare their intentions it is fair to add, as did the hon. Member for Taunton (Mr. du Cann), that this Clause will not do and that there may be considerable difficulties in finding a Clause which will do.
What happened in 1958 was that a very long Clause was moved on 2nd July, in column 1515 of HANSARD. It actually took about a column and a quarter, very much longer than the present Clause. It was moved by the hon. Member for Essex, South-East (Mr. Braine), who is now Joint Under-Secretary of State for the Colonies, and he urged a number of cogent reasons why it should be accepted. The Government pointed out that there were very grave difficulties about it; and there are, I think, inherent difficulties in the nature of the case which has to be considered. Two matters were referred to by the Royal Commission—the problem of how to treat residual value and the possibility of collusive sales. I am not necessarily saying that these matters are an insuperable obstacle. I do not know. I am waiting to hear what the Government have to say about it.
But the Government comment at that time, made by the present Secretary of


State for the Colonies, was, to say the least of it, discouraging, because this Clause takes about six lines and that one took about a column and a quarter of HANSARD. The Government's comment was that, clearly, to meet the problem satisfactorily, long and complicated legislation would be needed. How many columns of HANSARD would be filled by the long and complicated legislation I do not know, and I am certainly not prepared to commit myself on that.

Mr. du Cann: Would not the hon. and learned Gentleman agree on the whole that if it is possible for the Netherlands, Italian, Belgian and French Governments. to give only some examples, to deal with these matters, and deal with them adequately, the suggestions that we are making should be within the compass of the British Government?

Mr. Mitchison: I do not think I would accept that sort of analogy without knowing a very great deal more about the taxation systems of the countries in question. We have a taxation system of our own, and if one is going to fit something into it, one wants to make sure that one avoids such possibilities as the mistreatment of residual value and, certainly, the possibility of collusive sales, which are two of the difficulties mentioned by the Royal Commission.
All I say about it is that the time has come for the Government to say what they mean and what they propose to do about it. This matter has come up time and time again. Clearly, the new Clause, as moved, will not work. I am prepared to accept what was said in 1958 on behalf of the Government, that long and complicated legislation will be needed. What I want to know is whether the long and complicated legislation would meet the difficulties or not, whether the Government have made up their mind whether it would not meet the difficulties which were referred to in 1958. From that point of view, the time has come to inquire what the Government's intentions are.
I do not know what answer we shall get, but the new Clause has been on the Order Paper for some time, and there have been similar Clauses, not

always discussed, for the last four or five years. Nobody can complain that the Government have not had a chance to think. The question is very simple. Have the Government thought, and if so, with what result? With that rather qualified support, I hope we shall get some answer from the Government about it.
I ought to add that this is not, of course, entirely a matter of sand and gravel. I sometimes feel that sand and gravel make a frightful mess in the countryside. It is certainly the case that the associated iron ore producers from whom I have heard make at least an equal mess, but they are bound by statute to put the "divots" back and restore the land, and they have a levy for the purpose. They are in that respect one better. But we are not considering what damage is done to the countryside we are considering what is the fair and practicable treatment, for taxation purposes, of extractive industries.
I would add two points, both of which have been referred to already but which seem to be outstanding ones. First, if we look at this part of the Income Tax Act we find a sharp distinction between extractive operations abroad and extractive industries in this country—the difference between Section 305 and Section 310 of the 1952 Act. Secondly, if the whole transaction goes through—as I understand to be rarely the case nowadays —on a royalty basis, this sort of question does not arise in practice.
For those two reasons I fully appreciate the conclusions at which these two Royal Commissions arrived, and I trust that the Government will tell us whether they have a mind on the matter and, if so, what that mind is.

Mr. Hayman: I support the new Clause, partly because the greatest extractive industry in the west of England —the china clay industry of Cornwall—has not been mentioned. Being a Cornishman and representing a Cornish constituency, I am naturally interested in the matter. The only reserve I have is about what happens if a weathy concern buys up a large area of mineral deposits with the object of preserving the land for its own exploitation many years hence, thereby possibly preventing an earlier exploitation by other companies.
I see no reason to ask the Treasury tonight to think about this matter and perhaps prepare something for consideration next year. The Federation of British Industries seems to think that this is necessary but, as has already been pointed out, the question has come before the House year after year. The Treasury must be aware of all the difficulties and how they can be surmounted.
I hope that the Financial Secretary will be able to tell us that the Government are prepared to accept the principle of the new Clause and to put it into proper shape for consideration on Report. If this is a just and equitable concession, the sooner it is given the better.

Mr. Geoffrey Stevens: I support the principle underlying the new Clause. The hon. and learned Member for Kettering (Mr. Mitchison) was entirely right in saying that the object must be to try to clear up the intentions of the Government. I want to refer to one point which the hon. and learned Gentleman made—the question of collusive sales. That was the argument put up by the Paymaster-General, as he then was, four years ago. In view of the fact that the vast majority of deposits in this country are already part of the reserved land of companies which are operating extractive industries of this kind, the room for collusive sales in the future will be very small. I would think that it would hardly be right for the Government to put that argument forward seriously as a reason for not making this concession. The reserve land in hand accounts for just about 90 per cent. of the available deposits.

1.0 a.m.

Mr. Harold Davies: This problem has been brought forward by both sides of the Committee for years and we have never had a satisfactory answer. We know that the solution would cost the country very little. Many of us who represent rural areas have extractive industries in our constituencies. In Buxton, for example. there is a lime industry, and in my own constituency sand and gravel are extracted. It is time that the Minister gave a constructive promise to the Committee. I am not prepared to push the matter very far tonight, but time and time again we have brought this

matter up on Finance Bills without forcing a Division. The cost involved is so small that it is obvious that some answer could be found.
We think that there is a real case for a depletion allowance for extractive industries, and we take the talk of administrative difficulties with a pinch of salt. I ask the Financial Secretary to see whether for once he can give the Committee an answer which would be of value to the extractive industries of the country.

Sir E. Boyle: This is a Clause which, as one of my hon. Friends quite correctly said, has been supported by 58 hon. Members from both sides of the Committee, and they are able to quote in support the Millard Tucker Report and the 1955 Royal Commission. It is fair to say that in one important respect the Clause goes beyond what was said in that Royal Commission's Report, because it would not only enable the full amount of expenditure incurred in future on the acquisition of United Kingdom minerals to qualify for the allowance, but would also give the allowance for the future in respect of expenditure incurred in the past, which is contrary to the views of the Commission whose recommendation applied only to future expenditure.
I must say straight away, however, that I know the strength of feeling there is among hon. Members on this subject and that there would have been more and longer speeches had the subject come up earlier in the debate.

Mr. Harold Davies: We kept them short.

Sir E. Boyle: I am grateful for that, and I am not taking the fact that speeches have been few and relatively short as representing the strength of opinion.
There are difficulties here which have not yet been resolved, but I want to say at the start that my right hon. and learned Friend the Chancellor of the Exchequer will take into account the degree of support which the Clause has received and will certainly look into this matter again in the light of all that has been said before the next Finance Bill is drafted.

Mr. Davies: May I ask—

Sir E. Boyle: The hon. Member seems to be talking all the time. I do not want to be rude, but does he wish to interrupt?

Mr. Davies: Did we have a categorical promise that there will be a real examination of this matter before the next Finance Bill? That is all I want to know. It is as simple as that.

Sir E. Boyle: Those are exactly the words I used.

Mr. Davies: I wanted the hon. Gentleman to reiterate them.

Sir E. Boyle: The hon. Gentleman has reiterated them for me.
I should like to mention briefly the difficulties which arise here. Firstly, there is one point of principle which I am not sure was pressed in the 1958 debate. I mention it tonight because I am not at all sure that it is not the most important point. It is the difficulty about giving an allowance for the purchase of the right to income in the United Kingdom when the sum paid is not charged to tax as income in the hands of the vendor. Not all mineral operators purchase their minerals outright. Quite a substantial proportion lease the rights to work these minerals on a royalty basis. For instance, in the case of sand and gravel something approaching one half is worked on that basis.
The outright purchase of mineral rights or areas as an alternative to the payment of royalties amounts, in the words of the 1920 Royal Commission, to "a mere right to income" When an allowance is given under the existing law for capital expenditure on a mere right to income, as happens, for instance, in the case of patents, the allowance to the purchaser is always balanced by a charge on the vendor. But the Royal Commission considered, rightly, I think, that a countervailing charge would be inequitable in the case of mineral rights. It is not easy to see where the balance of equity would lie either way here; and this is one of the real difficulties which arise.
There are several practical problems. One of them, to which the hon. and learned Member for Kettering (Mr. Mitchison) referred, is the difficulty of fixing the residual value which ought to

be brought in at the end of the day. The Royal Commission recommended that there should be set against any allowances the residual value of the land at the close of workings. This is obviously right in principle, but there would be considerable difficulty in applying it to the varying circumof different types of mineral workings, particularly where there is a long interval between the close of working and the restoration of the surface. I do not want to enlarge on this point at length tonight, but I am quite ready to correspond with any hon. Member who wishes to pursue the matter. Time is getting on, and I do not wish to delay the Committee. I believe that the proposals to overcome the difficulty themselves genuinely give rise to further problems. This is a practical problem which we have not yet solved.
There is also the matter of avoidance. The implementation of what is proposed would, obviously, require special provision to prevent tax avoidance in those cases where the vendor and purchaser were not at arms length. I noted what was said just now by my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens), and I shall consider whether the point he made is valid, that, in fact, this is not so serious a matter as we had supposed. However, hitherto this has always been considered a real difficulty.
If we make a new law apply to minerals already purchased, then we shall be giving an allowance which no one expected at the time the purchase took place. We should then be giving a sort of unnecessary bonus, as it were. On the other hand, if we apply a new law only to minerals which are purchased in the future, then a different set of problems arises. On the one hand, one must remember that, to a great extent, mineral deposits, other than sand and gravel, have been purchased already. One would find, in fact, that an allowance restricted to future expenditure would please only the sand and gravel operators who are in a special position. There is also the point that, in practice, despite what has been said, this would result in some rise in prices. Therefore, there are difficulties in applying any change in the law to minerals already purchased or in confining it to


minerals purchased in the future. Whichever way we do it, difficulties arise.
I assure the Committee that my right hon. and learned Friend understands the strength of feeling on this whole matter and the question of equity. The real question is whether we can find some more equitable tax treatment which does not in its train bring fresh anomalies and greater problems than we have now. I assure the Committee that, particularly in the light of the strong feelings which have been expressed on both sides, the matter will be reviewed very fully before the next Budget and Finance Bill.

Mr. Mitchison: Section 310 of the 1952 Act introduced a provision similar to the one which is sought by this new Clause in respect of extractive industries working overseas. It originated, I think, in the Finance Act, 1949. Did its introduction involve all the difficulties which the hon. Member has put to us today? Most of them seem not to be particularly connected with the question whether the extractive industry works here or overseas.
I am glad to hear that the Government have been moved by the strength of feeling and the number of signatures. They are a little late in being moved since there were 80 signatures to the Motion in 1958.

Sir E. Boyle: If I may take the hon. and learned Gentleman's last point first, often when a subject has been aired several times on Finance Bills and it recurs after an interval of years hon. Members are not too pleased to see it again. I merely meant that on this occasion it is clear that there is still considerable feeling from hon. Members on both sides.
With regard to the overseas point, I am told that the provision in the Finance Act, 1949, arose as the result of a departmental committee on taxation and overseas minerals. It made a similar recommendation for an allowance rather on the lines of what had been said by the 1920 Royal Commission. For obvious reasons, I am not very familiar with the work of interdepartmental committees at that time. I think that it was always accepted that that recommendation was rather excep-

tional and was not intended to pre-judge the point now under discussion.

Dr. King: The hon. Gentleman said in his speech, to which we listened with great interest, that he would be prepared to take up with hon. Members on both sides some of the complications which he summarised briefly in his reply. If the Treasury is convinced that there is something in the case in equity, would he be prepared to meet members of the industries concerned to discuss with them these very problems—the problem of how collusion can be avoided, the problem of how we can deal with things which are worrying the Treasury, and so on—in the hope that between them they can arrive at a solution?

Sir E. Boyle: In an earlier year I received a deputation from the sand and gravel people. My right hon. and learned Friend authorises me to say that he sees no reason at all why Treasury Ministers should not receive a deputation on this subject with a view to pursuing these matters further.

Mr. Farr: I thank my hon. Friend the Financial Secretary for his very encouraging reply. In view of the assurance which he has given us, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(DOUBLE TAXATION RELIEF (AMENDMENT OF SCHEDULE 17 OF INCOME TAX ACT, 1952).)

In paragraph 3 of Part I of the Seventeenth Schedule to the Income Tax Act, 1952, for the reference to one half of the voting power there shall be substituted a reference to one quarter of the voting power. This amendment shall have effect for the purposes of income tax and the profits tax in the following cases:—
(a) any dividend received on or after the sixth day of April, nineteen hundred and sixty-two; and
(b) any dividend assessed to income tax for the year 1962–63 or any subsequent year of assessment; and
(c) any dividend included in the profits for profits tax purposes for a chargeable accounting period ending after the fifth day of April, nineteen hundred and sixty-two.—[Mr. Hirst.]

Brought up, and read the First time.

Mr. Geoffrey Hirst: I beg to move, That the Clause be read a Second time.

The Chairman: It would be convenient to discuss with this new Clause the new Clauses—Extension of Unilateral Double Taxation Relief—and—Amendment of Schedule 17 of Income Tax Act, 1952.

Mr. Hirst: That will be convenient, Sir William.
I apologise to the Committee on behalf of my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), who was here earlier this evening, but who has badly strained a muscle in his back and late nights on these benches make it a little trying for him. I will try to deputise for him.
I think that I can move the Clause with more than my average degree of agreeableness, which no doubt will be well accepted on the Treasury Bench. The new Clause—Extension of Unilateral Double Taxation Relief—the first of the new Clauses that we are discussing with the Clause I have moved, is much the same as that. The new Clause —Amendment of Schedule 17 of Income Tax Act, 1952—is different, though related. The matter can be put shortly. It is a technical matter. Unilateral double taxation is available to a United Kingdom parent company, not only for direct overseas tax on a dividend paid by an overseas subsidiary, but also for so much of the subsidiary's own overseas tax bill as is attributable to the portion of its profits devoted to the dividend. I cannot put it more simply than this.
I understand that this element is known as indirect tax. If the United Kingdom company controls less than one-half of the voting power in the overseas company, no unilateral relief for this portion—that is, the indirect taxation—can be obtained, except in certain limited cases, such as companies resident in Commonwealth Territories. When a dividend is received by a United Kingdom company from a foreign overseas company, credit for the taxes paid by such foreign overseas company cannot be taken into account, unless the United Kingdom company controls 50 per cent. or more of the voting power in the foreign company.

1.15 a.m.

The Royal Commission on the Taxation of Profits and Income recommended that such a credit should be applicable regardless of the degree of voting control. Neither my hon. Friend nor myself in either of these Clauses goes as far as that. We recognise that it may be argued, and reasonably argued, that it is sometimes difficult to obtain satisfactory evidence of the indirect tax relating to minority holdings. For that reason, our Clauses are limited to 25 per cent., a fact on which it should not be difficult to produce evidence.

We have to compete in many ways in the world today, and taxation plays an important part in that competition. Only this morning I received a message which is of interest to me. The same situation exists in other countries. The one I have in mind is America. It is worth noting that Section 902 of the 1954 American code says that an American company having only 10 per cent. voting stock has exactly the same relief as I am asking for here. I think that we are reasonable in putting this forward and in making the modest suggestion of an alteration from 50 per cent. to 25 per cent. of the voting power.

I make the passing comment that the new Clause—Amendment of Schedule 17 of Income Tax Act, 1952—is related but somewhat different from the Clause I am moving. As it is late, and certainly those who have followed this subject will understand it well, it is not necessary for me to explain the background, which relates to double taxation. The point is a simple one. It is that any credit against the United Kingdom tax payable, and of course properly receivable, is limited to the tax paid in the territory in which the company is resident. It is only fair to say that in actual practice, although I am not absolutely sure of the statutory position, credit is usually given for tax paid in a second territory if each of the companies covered is within the Commonwealth or has a double taxation treaty with the United Kingdom. The trouble comes where one country in the chain is a non-Commonwealth one which has no double taxation treaty.

I am suggesting in this Clause that there is no logical reason for this restriction. The Clause is designed to ensure that credit is due if all tax is paid by


the overseas company however many territories in which it trades. Bearing in mind the development as we see it today, it seems that in the ties which have been made in the past in relation to Commonwealth trade the distinction becomes less fine. I trust that the point is sufficiently made and that it will be studied, even if it cannot be accepted, because there is this changing pattern. A good deal of our law is not, as it might have been, designed to take cognisance of the changing trade pattern.

Mr. Barber: My hon. Friend the Member for Shipley (Mr. Hirst), with his usual clarity, has stepped into the breach almost at the last moment. I shall try to deal with this difficult and somewhat complex matter as quickly as I can at this hour in the morning. The Clause that he has moved seeks to modify a paragraph in Schedule 17 of the 1952 Act which deals with the computation of credit to be given for overseas tax. The paragraph in question provides that where a dividend is paid by a company resident in a non-Commonwealth territory, the United Kingdom credit by way of unilateral relief is to be allowed for the underlying or indirect tax only if the United Kingdom company controls not less than one-half of the voting power of the company which is paying the dividend. What my hon. Friend is proposing is that the credit should be allowed if the United Kingdom company has 25 per cent. of the voting power.
As some hon. Members will recall, some but not all of our double taxation agreements with foreign countries provide for credit to be given for indirect tax, and in principle the case for giving this credit is reasonable, although I remind the Committee that many countries do not accept this. But in the case of minority holdings, as my hon. Friend has fairly pointed out, there are certain practical difficulties. If the shareholder has a majority holding, then he can compel the company to give the Inland Revenue the necessary information. Alternatively, the Revenue authorities of the other country may be prepared to give us the information and undertake in a double taxation agreement to do so.
But where a shareholder does not have a controlling interest, where, for

example, he has only a portfolio investment and there is no agreement, it may be quite impossible for the Revenue to obtain sufficient information to calculate the relief, although it is clear from what my hon. Friend said that he is concerned primarily with the case where the United Kingdom company has a substantial holding in an overseas company for reasons connected with its own business and not as a mere portfolio investment. Where the holding exceeds 50 per cent., relief for underlying tax is due under the existing law, but I want to be quite frank with my hon. Friend and say that there may be compelling reasons why a holding should be less than the 50 per cent. at present provided for.
For example, the overseas Government may insist, either by means of statutory provision or by indirect pressure, that control must be with a local resident. While the benefit of relief for underlying tax ensues directly only to United Kingdom residents, there may be a real indirect benefit to the economy of the other country.
The reason is that the relief makes investment in that country more attractive, and the granting of this relief is therefore a benefit in return for which the United Kingdom, when we are negotiating an agreement with the other country, looks to the other country for some concession. Therefore, the wider the provisions for unilateral relief, the less we have to offer in an agreement and the less, consequently, we can expect to get from the other country. In other words, by widening the unilateral relief, we clearly reduce our bargaining power.
I am sure that hon. Members will appreciate, from what I have said, that relief for underlying tax is not as simple and as straightforward as it might at first sight appear, and I am therefore afraid that I cannot advise the Committee to go as far as is contemplated in the Clause. However, there are cogent arguments for the kind of case where a United Kingdom company has a large holding in an overseas company, but where the Government of the country in which the overseas company is resident refuses to allow the United Kingdom company to have a majority interest and insists that control should be in the hands of local residents.
We will certainly consider the matter further between now and Report, and


my right hon. and learned Friend has asked me to undertake to the Committee that he will introduce a new Clause which will, as far as possible, deal with this type of case. I am sorry that I cannot go the whole hog, as it were, with my hon. Friend, but I hope that he will appreciate the difficulties which I have mentioned and that, in view of the undertaking I have given, he will not seek to press his new Clause.
In passing, he very kindly dealt with the other new Clause in the name of my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), which deals with third-country tax. I hope that I can take that matter as briefly as he did and say that we will certainly consider the paint involved, but that in that case, unlike the other new Clause and the more general aspect of underlying tax, I cannot give any similar undertaking; but we will consider it further in the light of what has been said.

Mr. Mitchison: I do not want to take up the time of the Committee at this hour, but the hon. Gentleman who moved the new Clause should, I think, have as his motto, "The later the sweeter." The hon. Member referred to the Report of the Royal Commission, and the passage which I think he had in mind is at the end of paragraph 708. The conclusion there is
…that the indirect tax behind a minority shareholder's dividend should be generally recognised as ranking in principle for unilateral relief …
But I think that the Government will have in mind the way in which that sentence goes on,
though we are conscious that many persons with a potential title to relief will be unable to discharge the onus of proving their claims.
It would seem that a relief to which people are entitled will not be available to them; and that, I would submit, applies all the more to a case where the relief is extended to what I might term the quarter shareholders.

Mr. Hirst: I am grateful for my hon. Friend's helpful reply, and I accept his assurance that he will look at this matter again to see what it may be possible to do at a later stage. I would thank him, also, for elaborating somewhat on the background. As he said, the ten-

dency is for local people to demand a controlling share in these companies. The Royal Commission's words went too far for me, but I felt that some line should be drawn somewhere and, with this brief comment, I beg to ask leave to withdraw the proposed Clause.

Motion and Clause, by leave, withdrawn.

The Chairman: The next new Clause selected is not moved. I call Mr. John Howard to move his new Clause.

New Clause.—(SHIPS: COST OF TIME CHARTER-PARTY ACQUIRED FROM ABROAD TO BE TREATED AS AN EXPENSE).

(1) Where a person carrying on the trade of ship-owner acquires a time charter-party from a person not resident in the United Kingdom the cost of such acquisition may be deducted as an expense in computing the profits and gains or losses of that trade for any tax purpose.

(2) If a time charterparty is acquired together with a ship, so much of the cost of acquiring the time charterparty and the ship as, on a just apportionment, is properly attributable to the time charterparty shall be treated as the cost of acquisition thereof.—[Mr. John Howard.]

Brought up, and read the First time.

Mr. John Howard (Southampton. Test): I beg to move, That the Clause be read a Second time.
At this hour, nearly half-way through the middle watch, I do not propose to occupy the time of the Committee unnecessarily; but I was encouraged when I listened to the debate on the proposed Clause Depletion allowance for United Kingdom minerals—when a good deal of the principle at stake in my new Clause was conceded by the Front Bench.
The purpose of that new Clause was to bring taxation law into line with normal commercial accountancy practice, namely, that the cost of assets from which taxable income arises shall be written off for tax purposes against that income. The Chancellor has intimated his readiness to help the shipping industry through Clause 17, and my friends in this industry are grateful; although a certain elaboration of the provisions of that Clause, which we sought to achieve by way of tabling another new Clause, would have helped shipowners further.
This is not an occasion to enlarge upon the many difficulties facing British shipping, but I take it that the Chancellor is conversant with the problems of our declining Mercantile Marine. Shipping needs every kind of fiscal help. The Government have not been able to help much in the international matters of subsidies paid and of flag discrimination, but this new Clause would bring about a change in conditions which should increase the size of our fleet and the invisible earnings of shipping.

1.30 a.m.

The purpose of the new Clause is to allow British shipowners who purchase time charters from abroad to charge the cost of acquiring those time charters as an expense for tax purposes. The tax law as it now stands does not permit the purchase price of a time charter, that is to say, the cost of buying the agreement under which the ship is hired to a third party for a number of years, to be charged against income even though subsequent earnings from the time charter are taxable.

The present position is that opportunities occur from time to time to buy foreign ships, usually tankers, with profitable unexpired time charters, or alternatively to purchase from abroad time charters to major oil companies. After the purchase of a time charter, it can be transferred to a British ship or it can be arranged, if necessary, that the foreign ship bought with the time charter can also have its charter transferred and the other ship can be broken up.

There are three advantages, I suggest, in this Clause. First, it would achieve an increase in United Kingdom tonnage. Secondly, it would provide profitable employment for British ships. Thirdly, it would provide more employment for British crews.

Despite the opportunities, to which I alluded earlier, of acquiring time charters—and opportunities are occurring now—no purchases have been made by British shipowners. There is a very obvious reason, and that is that this market for time charters is a worldwide market, and while the tax codes of other maritime countries allow the cost of a time charter as a charge against taxable income, our tax laws do not. These things magnify the difficulty, in that the

price proposition for a United Kingdom shipowner becomes uneconomic, since the price he must find is out of taxed profits. Thus the trend is for time charters and ships to go to France, the Netherlands. Italy, Norway, or the United States, where a more up-to-date approach in the tax codes is evident. This new Clause seeks to place United Kingdom shipowners on level terms with their competitors in other maritime nations.

The anomalous position was recently illustrated by the sale of a modern Swedish tanker on a long-term time charter. British owners could not compete on purchase price because of the unfavourable tax position which I have mentioned. The vessel and the time charter were bought by an American-sponsored Bermuda company, but the ship was registered in the United Kingdom. I think that that probably illustrates quite succinctly the difficulties under which British shipping is labouring in this respect.

Surely it is not too much to ask that the cost of a time charter should be written off against profits. If it cannot be written off at once, at the time it is acquired, then it should be written off over the years covered by the charter. The corollary is that profits from the sale of a time charter should also be taxed, but this is excluded from the new Clause for the simple reason that it would he out of order if we sought to include it. Therefore, I am not pressing the Clause as it stands, because it is incomplete, for reasons of procedure. I should be very happy indeed to accept any words which my hon. Friend may wish to suggest, and I hope that the words he will suggest will cover all the implications of the proposals I have outlined.

Mr. Barber: My hon. Friend the Member for Southampton, Test (Mr. J. Howard) has explained very clearly the significance of the Clause to the shipping industry and the way in which the market for the sale and purchase of time charters operates, and I will not go over the ground again, nor, in view of the way in which he put his case, need I explain to the Committee the purpose of the new Clause. He put it clearly, and I agree with his description of it.
Before the Budget, my right hon. and learned Friend very carefully considered the situation of the shipping industry, and in particular he gave his mind to the question of the tax treatment of time charters. I mention this because I do not want the Committee to think that this matter has been seriously considered only since the Clause was put on the Order Paper. Since then, however, we have looked at it again.
The Committee is well aware that for some time shipping has received specially favourable treatment in one respect—investment allowances for new ships. Even when in 1956 investment allowances were suspended, new ships were specifically exempted and continued to rank for the allowance at 20 per cent., and in 1957 the rate was increased to 40 per cent. This treatment is a recognition of the special position of the shipping industry. My hon. Friend also fairly referred to the other step which has been taken this year in Clause 17 of the Bill which will be of special assistance to the shipping industry. I need not trouble the Committee with the details of the Clause, but I remind hon. Members that the cost of this change will be £6 million this year, and that about half of this cost is attributable to the benefit which will be gained by the shipping industry. This benefit to the shipping industry was one of the attractions of the proposal to my right hon. and learned Friend.
My hon. Friend the Member for Test wants my right hon. and learned Friend to go further and to provide some special relief in respect of time charters. What shipowners are asking for is to be allowed to write off the cost of the acquisition of time charters against their profits. Otherwise, it is said, United Kingdom shipowners cannot compete with foreign shipowners whose tax law allows them to claim a tax allowance for the purchase price of the time charter. I am sure that my hon. Friend, with his knowledge of the principles and practice of taxation, will agree that to allow a tax deduction for a capital outlay of this sort would involve a fundamental change in the basis of our Income Tax and Profits Tax. That factor is by no means conclusive, but I think that it is relevant, when we are considering a proposal to change the law in this way,

to take into account, first of all, the likely benefit which would result from such a change. In addition, one cannot ignore the likely repercussions.
As for the benefit of such a change, it seems to me that it would operate only in a narrow field and for a limited period. I have looked into the question with care, and the position is that time charters command a substantial price during a period of low freight rates following a time of high freight rates such as existed in the peak period 1955–57. As time goes on and the contracts are running out, and if rates recover, the premium value will disappear. At the end of last year I went to considerable trouble to try to find out to what extent the purchase and sale of time charters, either with ships or apart from the ships, would be relevant if we were to take any action of the kind contemplated in the Clause. As far as I could find out, sales of ships with time charters have averaged less than one a month over the past year or so. Of course, I can accept what my hon. Friend said, that as the law stands at present the purchase of a time charter could have no attraction to a concern paying United Kingdom tax at the full rates, although I am sure he will agree that different considerations may apply in the case of a shipowner whose profits fall short of absorbing the investment and other capital allowances to which he is entitled.
It is very important to appreciate that the distinction between the tax treatment of time charters in the United Kingdom and in European countries, to which my hon. Friend referred, springs not from any discrimination in favour of the shipowners in those European countries but simply from an entirely different conception of taxable profits. My hon. Friend referred rather glowingly to the European systems of tax. He said something to the effect that European countries have more up-to-date codes. But the Committee should recall that the Continental countries tax all the gains of a business and not merely those of an income character, as is the general rule in the United Kingdom. The Continental countries tax all the gains of a business, capital and of an income nature, and they also allow all the losses of a business. They do not draw the distinction which is generally


made in the British tax code between income and capital gains and losses, Nor do they have a system like ours under which relief given in respect of capital expenditure by way of depreciation allowances is generally given only on capital expenditure on physical assets but not on expenditure to acquire rights to future income.
I mention these points. One could go into this aspect of the matter at considerable length, but I think I have said enough to convince the Committee that when one is considering a proposal of this kind it is very necessary to consider it in the context of the general and very different principles of taxation which apply in this country. I think that if my hon. Friend looks at the tax codes of most European countries in the round, he will find that, although in certain respects they may be advantageous, in other respects they have, from the purely financial point of view, disadvantages for companies. So it is not all on one side.
I referred earlier to possible repercussions of accepting a proposal on the lines of the new Clause. What I had in mind was, as I am sure my hon. Friend will have anticipated, expenditure by other industries on acquiring similar types of right; for example, capital expenditure on a premium for a lease of business premises abroad. I ask the Committee to weigh in the balance, on the one hand, the important and possible repercussions from the basic change which my hon. Friend has suggested, and, on the other hand, the likely value to the shipping industry. For the reasons which I have given—as I said, I went to considerable trouble to get information about this—we think that the importance of the new Clause to the shipping industry is really relatively small.
While I cannot advise the Committee to accept the new Clause, nor can I even go as far as I did on a previous new Clause and hold out hope that something might be done on Report, I assure the Committee that my right hon. and learned Friend will continue to keep the interests of the shipping industry very much in mind. In the light of the change which has already been made in Clause 17, I am sure my hon. Friend will accept from me that these are not

idle words. Having said that, I hope that my hon. Friend will not seek to press the new Clause.

1.45 a.m.

Mr. Mitchison: I have two very short comments to make. First, there is the practical point that appeals to me as an objection to the new Clause. It gives a shipowner relief at the wrong time; that is to say, he will buy his charter-party at a time when freights have gone up and he stands in least need of relief; otherwise there would be no charter party worth buying. It must be implied that the time charter-party is at a rate lower than that prevailing at the time when the purchase is made; otherwise there is nothing to buy.
Secondly, both the character of the new Cause and what was said by way of comparison between the taxation practice here and in other countries illuminates in my eyes the artificial character of the distinction, for taxation purposes, between capital and income, and gives indirect support to the new Clause dealing with capital gains which was rejected by the Committee some time ago.

Mr. J. Howard: In view of the very limited assurance given by my hon. Friend, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(EXTENSION OF THE DEFINITION OF OVERSEAS TRADE CORPORATION.)

(1) Section twenty-three of the Finance Act, 1957, shall be amended—
(a) by the omission of the word "and" at the end of sub-paragraph (ii) of paragraph (a) of subsection (1) and the insertion of "or
(iii) it is a principal company not itself carrying on a trade but having a subsidiary company (to be known as a Qualifying Subsidiary) which is not resident and is not carrying on a trade in the United Kingdom and which would qualify as an Overseas Trade Corporation if it were so resident, and"
(b) by the insertion after subsection (2) of—
(3) A company may elect that a subsidiary company which would otherwise be a Qualifying Subsidiary shall be deemed not to be a Qualifying Subsidiary. Such election should be made by notice having effect as from the beginning of the period in which it is given".


(2) Section thirty-five of the Finance Act, 1957, shall be amended by the addition of—
(4) Where an Overseas Trade Corporation receives from a Qualifying Subsidiary a dividend on shares in that subsidiary the dividend shall, so far as it is to be regarded under regulations to be prescribed as paid out of income arising to the subsidiary from the trade carried on by it, constitute trading income of the recipient.

(3) The Fifth Schedule to the Finance Act, 1957, shall be amended by the deletion in the first line of sub-paragraph (5) of paragraph 2 of "subsection (3)" and the substitution of "subsections (3) and (4)".

(4) The Sixth Schedule to the Finance Act, 1957, shall be amended—
(a) by the insertion after the word "person" in the second line of subparagraph (1) of paragraph 1 of the words "other than a Qualifying Subsidiary".
(b) by the addition at the end of paragraph 1 of—
(6) The preceding sub-paragraph shall apply as if it constituted a grant or loan to an amount paid by an Overseas Trade Corporation which qualified as such under sub-paragraph (iii) of paragraph (a) of sub-section (1) of section twenty-three of this Act, as a subscription for share capital of a company which is an associated person and is not a Qualifying Subsidiary.
(7) Where an Overseas Trade Corporation has made a grant or loan to a Qualifying Subsidiary, or has subscribed for share capital of such a subsidiary, and the payments are regarded as having been made in whole or in part out of exempt trading income, and the Qualifying Subsidiary itself makes a grant or loan to an associated person or subscribes for share capital of a company which is an associated person such payments by the subsidiary shall be regarded as having been made primarily out of the amount received from the Overseas Trade Corporation, and to the extent to which that amount was regarded as having been paid out of exempt trading income the same consequences shall follow as if the Overseas Trade Corporation had made a grant or loan to an associated person.

(5) The preceding subsections shall not operate so as to increase in any case the amount of tax payable under the Income Tax Acts.—[Mr. Hirst.]

Brought up, and read the First time.

Mr. Hirst: I beg to move, That the Clause be read a Second time.
I admit that originally I thought that I would be doing this at about three o'clock in the morning. My agreeable mood, to which I referred a little while ago, is therefore fully maintained, now that we have reached this new Clause earlier in the evening. Nevertheless, this

is a fantastically technical matter—not exactly the sort of material that one wants to digest at one o'clock in the morning—and having made a fair note of the remarks I want to make, and in order to make my speech shorter and much clearer, I hope that the Committee will not mind if I pay more than my usual attention to my notes, which I normally do not like doing.
As I understand it, at present a United Kingdom company qualifies as an overseas trade corporation only if it operates abroad through branches or subsidiaries which are managed and controlled in the United Kingdom. This has the effect of encouraging an obsolete mode of carrying on business overseas. Modern trading conditions and national susceptibilities require that overseas trading should be conducted by subsidiaries formed under the laws of the countries concerned, and that they should be managed and controlled there in order to secure the fullest possible co-operation with local interests. This is a point which the Economic Secretary recognised when we were dealing with the question of double taxation.
One object of the Clause is to bring the very good moves the Government have made in regard to overseas trade corporations a little more into line with present circumstances, as they are developing.
If a United Kingdom parent company with non-resident subsidiaries qualified as an overseas trade corporation the parent company would be able to receive dividends from its subsidiaries without the intervening burden of United Kingdom tax. The opportunities for profitable reinvestment would thus be increased, and there would be a beneficial effect on our competitive position and on the balance of payments. Moreover, the United Kingdom parent company would no longer be in an adverse position compared with its Continental counterparts, for such subsidiary-to-parent dividend are normally exempt from tax. This sort of thing is operating satisfactory in France, the Netherlands, and Luxembourg—and tonight I have been told that it also operates in Switzerland and Finland, while Italy grants partial exemption. This favourable treatment elsewhere has


resulted in considerable trade and investment opportunities being lost by United Kingdom companies to Continental firms.
Many anomalies which arise from our still imperfect double taxation relief system— and this is not a criticism, because it is terribly difficult to perfect it —would be partially removed in this context. The object of the new Clause is to permit this, and I understand that it requires two, and maybe more, steps to be taken. Firstly, permission has to be given to an O.T.C. holding company to have a foreign-registered subsidiary. Secondly, the income received by the holding company from that subsidiary has to be treated as trading income. The new Clause, imperfect and long-winded 3 s I am sure it is, seeks to take both those steps, while making the best attempt that an amateur draftsman can make to close all possible loopholes through which avoidance might take place.
I trust that this elementary but I hope reasonably clear comment has indicated the purpose behind the Clause. It may not be possible for the Government to accept it but I should be grateful for the sort of assurance which I drew from the Government spokesman earlier that thinking is taking place and that the Government realise that, however good the old pattern was in its way, it must be changed fairly soon if we are to have regard to the movement which once again is taking place in the world.

Sir E. Boyle: It is rather suitable that my hon. Friend the Member for Shipley (Mr. Hirst), who has been extremely active throughout debates on the Finance Bill, should be moving the last new Clause. After having listened to a number of speeches, some of them critical and some of them not quite so critical, one might almost feel tonight, at the end of the Finance Bill, inclined to remind my hon. Friend of the words of the epitaph on the tomb of Sir John Vanbrugh:
Lie heavy on him, Earth! for he Laid many heavy loads on thee!
I should like to congratulate my hon. Friend on the extremely lucid manner in which he introduced the new Clause. While on paper it is a long one, its

object is perfectly clear, namely, to extend the overseas trade corporation provisions which were enacted in the 1957 Finance Act to non-resident subsidiaries of a United Kingdom holding company. We have debated this proposal before on the Finance Bills of 1957, 1958 and 1959, and my right hon. Friend the present Secretary of State for the Colonies replied in the last Parliament on this subject.
I can tell my hon. Friend that in the last year or two further examinations and consultations with industry have taken place. Ministers have looked at this matter extremely carefully, but having done so, they came to the definite conclusion last year that they ought not to extend the O.T.C. scheme in this way. I do not want to be disingenuous with my hon. Friend in the least, but this matter was fully looked at last year before the introduction of the Finance Bill. It was my right hon. and learned Friend's conclusion that he ought not to extend the scheme in this way, and since then the balance of payments difficulties that we have had have perhaps made that proposition even less attractive than it was before.
I want to follow my hon. Friend's example in not being long. There are four reasons for this conclusion on the part of my right hon. and learned Friend. First, we have looked at this matter many times. I still do not believe that it would be possible to frame anti-avoidance provisions which would be really watertight and workable. I do not want to rely entirely on that point, but it remains as strong as ever.
The second point is that the whole Object of the O.T.C. scheme was to benefit resident companies. The retention by companies operating overseas of their United Kingdom residence benefits this country din a number of ways. It was one of the merits claimed for the scheme that it would prevent the migration of United Kingdom companies abroad.
The next point is that non-resident companies do not, as a result of the legislation, pay more United Kingdom tax than they did before. They still have certain tax advantages as compared with overseas trade corporations. Unlike overseas trade corporations, they are not


liable to Profits Tax on their investment income, and they are not liable to Income Tax on overseas investment income or on income from War Loan and certain other British Government securities. I believe, therefore, that the treatment in equity as between these two types of companies is broadly fair at present.
There is the further consideration that some concerns may have reorganised the structure of their business so as to bring themselves within the scope of the overseas trade corporation relief. There might well be a feeling that it was hardly fair if the decision not to include nonresidents were reversed so that their reorganisation thereby became unnecessary.
I shall not say more on this occasion. I assure my hon. Friend that this matter was very fully considered in 1957 when the scheme was originally brought in. It was again considered in subsequent years. For all that my hon. Friend has very fairly said, the Government do not consider that it would be consistent with the scheme as they envisage it for this extension to be made. I could not advise the Committee to accept the new Clause.

Mr. Hirst: I thank my hon. Friend for that reply, disappointing though it was, but I hope that he will not rest too much on the argument that the scheme was carefully thought out in 1957 and should continue unchanged. I remember the discussions we had then, and I have looked up the report of them. The point I made, which perhaps I did not sufficiently emphasise, is that change is taking place. There is the growth of national susceptibilities, the growing demand that control should be centred elsewhere. We should not, I suggest, fight against these changes. We should not all the time continue the

pattern of what was devised in the past, a scheme instituted when the Commonwealth or some other system was a unit. We must realise that, if we are to retain our trading position and get full benefit from it vis-°-vis our competitors—who have much better treatment in this respect than we have, I understand—we must surmount this hurdle.
I ask my hon. Friend not to rest his case on the argument that all this was thought out in 1957. That does not impress me much, because a great deal has happened since then. Much of what has happened I do not like, but the fact remains that it has happened. Our trading pattern has altered enormously since then, and it will go on altering.
I am not satisfied with what my hon. Friend has said, because there is nothing really to be satisfied about. I do not want to press the matter further, but in the circumstances, just to emphasise the view I take, I shall not ask leave to withdraw my Motion and Clause.

Sir E. Boyle: Since my hon. Friend feels that he cannot, in the circumstances, ask leave to withdraw his new Clause, I should stress—as I made clear in my speech—that this matter has been looked at very much more recently than 1957. I said that originally, when the scheme was going through, the whole scope of it was, naturally, a matter for very full consideration. However, precisely because of the considerations which my hon. Friend has advanced tonight, the Government looked at the matter again very much more recently, but they did not feel that they could widen the scheme in the way my hon. Friend suggests.

Question put and negatived.

Eleventh Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered this day and to be printed. [Bill 121.]

NUCLEAR TESTS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLaren.]

1.59 p.m.

Mr. Frank Allaun (Salford, East): I want to make it clear that what I am going to say applies to all tests—American, Russian, British, Fench, the lot. I am against all nuclear test explosions. At the root of our present conflict are the mutual fears of capitalist and Communist Governments. Four hundred years ago wars were fought between Protestant and Catholic countries over religion. Today no one would dream of war for this reason. By the year 2000, if there is anything of civilisation left, if we have survived, people will think it incredible that in the 1960s intelligent people were prepared to wipe out humanity, or risk wiping it out, over a mere difference about the ways of running industry.
This morning, coming to the House from my "digs" in Lambeth, I came across a bus carrying mentally defective children. The bus was collecting them from their homes. Many of the children were accompanied by their mothers, whose lives had also been ruined by their children's affliction. If the tests, from whichever country, add a single victim of this kind, they are a crime against humanity. But they will not add just one victim; they will add many victims of this kind. Admittedly, there is disagreement among the scientists, but it is as to the degree of effect that the tests will have. Among all reputable scientists there is agreement that there will be, both to the present and to future generations, some physical and mental injury.
But it is not with the medical and scientific aspects that I want to deal tonight. I intend to show that these tests are part of a nuclear arms race which is rapidly taking mankind to the precipice. I suggest that the chances of human survival are today roughly fifty-fifty. As the race continues, the odds worsen. If things are allowed to continue in their present way, there is, first, a grave danger of war by accident, and secondly, nuclear weapons will spread to more and more countries. This will mean an

increase in the danger of war by accident, and also sooner or later these weapons will get into the hands of a fanatical Government, perhaps some small dictatorship, which will be prepared to use the weapons and even to risk retaliation. In 1945, if Hitler had had the bomb I believe that he would have been prepared to use it, even if he had known that it would have meant suicide, because he was prepared, as we know, with his entourage to commit suicide in the bunkers of Berlin.
The sensible solution would clearly be for the Governments of the world to get round the negotiating table and end this madness. Every sane person would like to see this happen. Unfortunately, I personally have no belief that disarmament will take place in this way, because history is against it. Ever since 1922 disarmament conferences have come and disarmament conferences have gone without agreement on anything. More recently, the big three—Britain, America and Russia—have been meeting in Geneva to stop the tests. If we cannot stop the tests, we have precious little hope of stopping anything else. They held 353 sessions without any success at all.
Why do these disarmament conferences fail? Because the Governments go to them not genuinely seeking disarmament so much as an excuse for blaming their rivals for the breakdown of the talks, or a formula which will give them some advantage from a military point of view. They have never reached success in that way, and I am certain that they never will. Are we, then, to sit back and let the nuclear arms race take its course, knowing, as we must, that it can have only the same outcome as all previous arms races in history? I suggest that no self-respecting man or woman can do that.
Therefore, a growing number of people have been driven to the conclusion that the world is waiting for one great nation to have the sanity and courage to break out of this nuclear arms race, to contract out. If that were done, I believe that it would have a tremendous effect. It would lessen the tension between the Great Powers, it would cut the vicious circle of each government waiting for the other to act


first, and it would produce an atmosphere in which it would be possible to reach agreement.
I admit that it is unrealistic in the present state of tension to expect that there would be unilateral total disarmament—that would be Utopian—but limited unilateral action by one nation stopping the tests would be realistic, would be possible, and would have tremendous effects. I believe that it would lead to unilateral limited action by the opposing bloc in response. Once the tests were stopped, we would have created a basis for a more important development. Just as the tough men in the West encourage the tough men in the Eastern Governments, and vice versa, so the setback to the tough men in either bloc would mean a setback to the tough school of thought in the opposing Government.
The differences between East and West on the tests ban are small. It is generally accepted that all atmospheric tests can be detected by existing means and also underground tests, certainly those under five kilotons. The Russians say that they are prepared to have on-site inspections only by invitation. I believe that is wrong. The Americans —and, of course, the British Government, with their usual subservience, says "Amen"—use this as an excuse for not stopping the tests. I think that is equally wrong.
The Prime Minister's excuse is that these tests could be detected, even the small underground ones, but that it might be hard to distinguish them from earth tremors. I am sure that whatever the risk—and there is a risk—of Russia undertaking small undetected underground explosions, that risk is far less than the alternative, which is round after round of atmospheric tests, of the arms race getting completely out of control, as it very nearly is now.
Then there are those both in the East and in the West who say that stopping nuclear tests is irrelevant, and that nothing less than complete disarmament is required. I think that is nonsense, because these gentlemen know how unrealistic such a demand is. They are making that excuse for making no progress at all. If we could stop the tests,

further disarmament would become a possibility, but only then.
The fact that the Leader of the Government and the Leader of the Opposition are agreed in accepting United States tests has prevented Members of Parliament from voting against them. This is making a mockery of democratic Government. We can vote for or against imposing a tax on kiddies' sweets, yet we are prohibited from voting against the extension of the arms race which looks like costing all children their lives. On 5th March, the Prime Minister's excuse was:
The Russians have certainly acquired from their tests much useful information …it may be that these developments include significant advances in defence capability."—[OFFICIAL REPORT, 5th March, 1962; Vol. 655, c. 32.]
I expect that that is true, but that is precisely the argument used by the Russians to excuse their tests. So the mad dance continues until the disastrous finale, unless we prevent it.
My own view is that these two giants are so locked in combat that only action by a third party, the neutrals or those in either of the East or West main countries which are themselves neutral, can release them. Fortunately, the instinct for human survival has been alerted. A great and growing number of people are becoming aware of how close to extermination their governments are taking them. Events are great educators. Despite the fact that not a single newspaper with a circulation of more than 100,000 takes this point of view, this point of view is swelling throughout the world. Every new revelation of crisis in Vietnam or Berlin, or of some accident to a nuclear weapon, takes new millions into awareness and into activity. If we keep up the pressure against these nuclear test explosions, we will win.

2.12 a.m.

Mr. Anthony Greenwood: I should like to congratulate my hon. Friend the Member for Salford, East (Mr. Frank Allaun) on having raised this matter and to thank the Under-Secretary of State for giving me an opportunity to support my hon. Friend's protest. Like him, I am against all nuclear tests, whether they are our own, American, Russian, French, or made by any other country.
I was in the United States earlier this year when the President announced the American series of nuclear tests, and I know that the President made that decision extremely reluctantly. There were many people all over the United States, not only supporters of the National Committee for a Sane Nuclear Policy, but many other people in the United States who were as reluctant and as heavyhearted as the President himself. I shall always remember the sad faces around the television set when we watched the President making his announcement to the nation.
But those tests were accepted. We in this country have endorsed them, and I have found it remarkable that so many hon. and right hon. Gentlemen who spoke in extravagant language, but, nevertheless, perhaps just language, about the Russian tests towards the end of last year, when they spoke about genocide and homicide, have found it possible to accept the American tests as being justified by military necessity.
In the last few months, I have had the opportunity with some of my colleagues of going to speak to the American Ambassador and also to the Russian Ambassador on this subject of nuclear testing. It would be wrong for me to report to the House in detail on the conversation we had with Mr. Bruce and with Mr. Soldatov. I would only say that I believe that both of them are kindly, humane and imaginative men who are as worried as we are about the consequences of what is happening. But they are convinced that their own nuclear tests are justified by the military requirements of their country's defence policy.
Each nation urges the need for not letting any other nation get ahead of it in the field of nuclear weapons. We now have to start asking where this policy is to lead us. We know that Russia already has the capacity to exterminate the United States in a matter of minutes. We know that America has the capability to exterminate the Soviet Union. It is difficult for reasonable people in other parts of the world to accept that either country is under any compelling necessity to intensify the nuclear race in which those two countries are at present engaged.
I believe that there is a great danger of nuclear weapons spreading to other

countries. I hope that there is no truth in reports an the newspapers in the last few weeks that France is blackmailing this country and the United States into sharing nuclear secrets with her. I say that because the more that nuclear weapons are spread, and the more that knowledge is spread, the more likely it is that this vicious spiral of testing will be accelerated.
It is true that the danger from fallout may be less than was originally expected, and in this context I would like to quote from an article by Mr. Tom Margerison in the Sunday Times on 29th April in which he wrote:
It is almost certainly true that with recent developments fall-out dangers have decreased and the prospect of mankind's survival is correspondingly enhanced. But this will be of small comfort if the consequence is to be an ever-increasing spiral of tests as East and West battle for nuclear supremacy.
That the hazards are less than were originally supposed is now being used as an excuse for an intensification of testing, and only the neutral countries are showing any true sense of realism.
I should therefore like the last word to be with the writer of a letter to the Guardian dated 1st June, written by a person who signed herself, Sincerely, but with great bitterness, A Mother." The letter said:
I write and think as a woman and as a mother. My child died three days after her sixth birthday of leukaemia, caused, a cancer specialist felt certain, by radiation. (I had had no X-rays.) Every time another test is announced I feel sick at the thought of the pain and suffering lying in wait for thousands of children and parents. We hear statistics, words, easily said. ` Yes, we know radiation causes leukaemia '; Mr. Kennedy is very sorry if his tests affect the health of anyone in the Northern Hemisphere'; Mr. Macmillan and Mr. Khrushchev regard the danger as ` negligible.'
After all, what is 35 children a year dying in Manchester alone? It's negligible. But what if you hear the death sentence pronounced; if you watch it happening, slowly but surely; if you visit the hospital week in, week out, for blood tests and treatment; if you administer the endless drugs, at times as many as 13 a day, which make a poor little fiveyear-old enormously fat; until after 14 months they say, 'We can do no more. She may live for a day or two, or a week or two—we don't know''?
And after a bad night, the dreadful bleeding, the feeling of choking on blood, and the cry ` Mummy, can't you do something? Can't you do something to stop it? 'But Mummy can do nothing but get oblivion for her as quickly as possible and begin the long wait,


day and night, until she bleeds to death praying that the moment will come fast when she is released from this evil world.
This is what that word `negligible' means in terms of human suffering. This is what is being condoned and agreed to as 'necessary'.
Sir, I wish that the statesmen of both East and West would show just a little of the compassion and commonsense of that British mother.

2.18 a.m.

The Under-Secretary of State for Foreign Affairs (Mr. Peter Thomas): This is a subject of extreme importance, and the hon. Member for Salford, East (Mr. Allaun) and his hon. Friend the Member for Rossendale (Mr. Greenwood) quite obviously attach great importance to it, as, indeed, so do we; that is, the Government Front Bench. I appreciate the views they have put forward and certainly accept that they are views genuinely held. As they know, there are wide differences of approach between them, on the one hand, and us and the official Opposition on this matter and, therefore, we probably approach this problem from different points of view.
I agree with the hon. Member for Salford, East in this respect; I certainly agree that all nuclear testing should be brought to a stop and that one of the important reasons for this is to prevent the proliferation of nuclear weapons to countries not possessing them. Where we differ is in the means- of achieving this. The hon. Member said we should think in terms of taking a moral lead, but I would suggest that there is no reason for thinking that a unilateral lead will be followed by others. In fact, the evidence is entirely to the contrary. We had a moratorium on nuclear testing which lasted for three years, and we should still have had it if the Russians had not broken it with a series of tests which were obviously planned in secrecy and duplicity. Therefore, I I would suggest that the evidence is certainly not that a unilateral lead by Britain would bring about the effect the hon. Member desires.
I think that in the time left to me the best thing I can do is to give factually, not emotionally, the background which has led to the present series of tests and the reason why the Govern-

ment support them. The Geneva Nuclear Tests Conference opened in October, 1958, and, in the course of three years' negotiations, during which time we had this moratorium I have mentioned, we made substantial progress towards the drawing up of a treaty banning nuclear tests. In April, 1961, on the basis of the work done by the Conference, and with the impetus of a number of new concessions put forward in March, 1961, to meet suggestions frequently put forward by the Soviet delegation, the United Kingdom and United States delegations tabled the text of a complete draft treaty.
At some point—we cannot determine precisely when—the Soviet Government made it their policy not to conclude such a treaty. They started to introduce all sorts of proposals which we can now see were clearly designed to prevent the signing of a treaty. At the end of August, 1961, they announced, for reasons unconnected with the negotiations, that the Soviet Government would resume testing. In the following two months they carried out a series of over forty tests for which preparations must have been put in hand a long time in advance.
The United States and United Kingdom Governments, despite this setback, continued their efforts to achieve a treaty incorporating provisions for international supervision and verification of its observance. This principle was overwhelmingly endorsed by the United Nations General Assembly.
In November, 1961, the Geneva Conference met again. The following meetings proved completely abortive. The Soviet delegation counter-proposed a treaty whose observance was to be guaranteed entirely by national detection systems. In January, 1962, the Conference went into recess.
The Western Powers had to face that situation in which there were three major factors. First, the Russians had concluded a very large series of tests in the atmosphere, from which it now became clear they had gained substantial and important information reflecting a highly sophisticated technology. Secondly, they refused to discuss any kind of system of international verification which would make it possible for the Western Powers to sign a treaty.


Third, there must in this situation be a strong presumption that the Russians would be prepared to carry out further tests when this suited them.
Accepting, as we do, that the maintenance of an effective nuclear deterrent is basic to Western security—and we have to accept that: that is what we believe--the Western Powers had no choice but to make their own preparations.
It has been said that the destructive power of nuclear weapons is already so great that the balance of the deterrent can never be destroyed and that further tests can therefore serve no useful purpose. But what is involved in mutual deterrence is not just the explosive power of the weapons. It includes the nature of the weapons, the means of delivery, and possible means of preventing their delivery. Naturally, I cannot enter into the technical details here, for many reasons, one of which is that I am not qualified to do so, but those in the best position to judge believe that unless we gain more experimental evidence we shall not be in a position to assess with any firmness what the possibilities are.
President Kennedy, in a television address on 2nd March, said that
a further Soviet test series, in the absence of further Western progress, could well provide the Soviet Union with a nuclear attack and defence capability so powerful as to encourage aggressive designs …further major Soviet tests in the absence of Western tests might endanger the Western deterrent
As the hon. Member said, the Government and the official Opposition supported these preparations, and the Government agreed to make Christmas Island available as a base. At the same time, both Governments, the Americans and we, made it clear that they were prepared to abandon their plans for the tests now in progress in the Pacific if the Russians would sign a treaty to end tests under appropriate safeguards.
The hon. Member referred to the Disarmament Conference, and said that there was a small difference between the two sides there. It may appear to be small, but in fact it is vital and fundamental. Since the Disarmament Conference began in Geneva on 14th March, the Russians have adamantly rejected the concept of international verification. Instead, they have maintained that all tests can be detected and identified from the readings of instruments at detection

posts, making on-site inspection unnecessary.
This was not the conclusion of the 1958 conference of experts, in which the Russians took part, and it is not supported by Western scientists. As a possible means of resolving this difference. it has been repeatedly suggested to the Russians that their scientists should confront those of Western and neutral Powers and explain their techniques, but these suggestions have been rejected. I cannot accept the hon. Gentleman's views about the detection of underground explosions. He said that only small tests might go undetected. I am told that it is not a matter of size but one of kind.
On 10th April the President and the Prime Minister issued a statement to the effect that the planned series of American tests must take place unless the Russians could accept the principle of international verification. The Prime Minister accompanied this by a personal message to Mr. Khrushchev. The latter's reply was definite, negative and polemic. He dismissed all proposals for inspection as espionage.
On 16th April the eight neutral members of the Geneva Disarmament Conferences sought to break the deadlock by tabling their own memorandum and inviting the three nuclear Powers to adopt its principles and to turn them into treaty form. The memorandum provided for an international scientific commission, a scientific detection system, and inspection of doubtful events.
A serious obstacle to the negotiation of a treaty on this basis is that the Russians continue to insist that any inspection may be carried out only on the invitation of the State on whose territory a doubtful event might occur. Nevertheless, the memorandum has been accepted as a basis for negotiations and talks are continuing.
The American series of tests in the Pacific began on 25th April, and to date there have been fifteen tests. In March, Mr. Khrushchev had already said that if the Americans tested in the atmosphere the Russians would in turn conduct further tests. He was recently reported from Bulgaria to have confirmed that the preparations are under way. We therefore assume that some Russian tests will take place. The hon. Member


said that we are back in a vicious circle, but it need not be so. It may well be that thereafter the prospects for a treaty will be improved. Until there is a treaty, if the Russians want to test I doubt whether anything will deter them from doing so.
Reference has been made to the dangers of fall-out. The dangers of fallout are recognised, and any Government concerned with nuclear weapons may have to resolve the conflict between the desire not to create additional radioactivity and the necessity to ensure that the nuclear deterrent remains effective. In the American tests, every precaution is taken to keep the amount of fall-out created to a minimum, and it is estimated that the total effects from the current series of tests will equal at most 1 per cent. of those due to the natural background of radiation. Any addition to the natural background is admittedly undesirable, but the only certain way of avoiding this is to sign a permanent and effective tests ban treaty.
I have tried to explain in the short time at my disposal why we have reached the position of having to test again. We should greatly prefer it if this necessity had not been forced upon us. Many people are appalled, with good reason, by the possibility of nuclear war, and react against nuclear tests because they associate them with a readiness to embark on nuclear war. But this is the wrong antithesis. The choice is between maintaining the deterrent, which means conducting nuclear tests if Soviet policy makes this necessary, or abandoning the policy of the deterrent and being prepared to surrender to nuclear blackmail.
This we are not prepared to do. Total war today would be —

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half-an-hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes past Two o'clock.